European Markets Open Lower
European equity markets were set to open lower on Wednesday as investors digested rising geopolitical tensions and awaited the U.S. Federal Reserve’s interest rate decision.
- Euro Stoxx 50 futures slipped 0.3%
- Stoxx 600 futures edged down 0.2%
Sentiment was hit by comments from U.S. President Donald Trump, who demanded Iran’s “unconditional surrender” and threatened to strike Supreme Leader Khamenei, further escalating tensions in the Middle East.
Investors are also eyeing:
- UK inflation data
- Sweden’s Riksbank policy decision
Both could influence European interest rate expectations.
📉 Japan’s Exports Decline Amid Tariff Pressures
Japan’s exports fell 1.7% year-on-year in May 2025 to a four-month low of JPY 8.13 trillion, reversing a 2% gain in April. This marked the first decline since September 2024.
- Shipments to the U.S.: ↓ 11.1%
- Exports to China: ↓ 8.8%
- Increases: EU (+4.9%), Russia (+5.2%), ASEAN (+0.1%)
Trade War Impact
The decline came as U.S. tariffs bite, especially on autos, auto parts, and chip machinery. Japan is seeking exemption from 25% U.S. auto tariffs, while Trump has doubled duties on steel and aluminum to 50%. A 24% retaliatory tariff from Japan is scheduled for July 9, unless a deal is reached.
🪙 Gold Slips as Dollar Gains, But Central Banks Remain Bullish
Gold prices edged lower to around $3,380/oz on Wednesday. A stronger U.S. dollar weighed on prices, even as Middle East tensions drove safe-haven demand.
Key Drivers:
- Israel conducted strikes near Tehran
- Iran launched missiles in retaliation
- Trump held a national security meeting, sparking fears of U.S. military involvement
Meanwhile, a World Gold Council survey revealed:
- 95% of central banks expect global gold reserves to rise
- 43% plan to increase their own holdings — a record high
đź’µ U.S. Dollar Eases After Tuesday Surge
The U.S. Dollar Index (DXY) dipped slightly to 98.6 after a near 1% gain on Tuesday, driven by safe-haven flows due to the Israel-Iran conflict.
What to Watch:
- Federal Reserve is expected to hold rates steady
- Market focus is on forward guidance
- Upcoming U.S. data: housing starts and jobless claims
Despite weaker retail sales in May, consumer spending remains resilient, underpinned by strong wage growth.
đź“Ś Takeaway
Global markets remain on edge as geopolitical risks, trade tensions, and monetary policy uncertainty collide. Investors are bracing for potential volatility spikes driven by:
- Fed’s policy stance
- Ongoing Middle East conflict
- Looming U.S.-Japan tariff deadlines
