MarketUpdate

📰 Market Update: US Strikes Iran, Oil Prices Jump, Japan’s Manufacturing Recovers

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June 23, 2025 – Global markets are reacting sharply after a surprise escalation in the Middle East, pushing oil prices higher and rattling investor confidence. Meanwhile, fresh data from Japan hints at a modest recovery in the manufacturing sector.

🇺🇸 US Stock Futures Edge Lower After Strikes on Iran

Stock futures dipped early Monday after the United States launched airstrikes on three Iranian nuclear sites over the weekend. The move, which came sooner than expected, has raised fears of retaliation from Tehran and broader regional instability.

President Donald Trump, who had suggested on Friday he’d wait “two weeks” before making a decision, warned Saturday that “there will be either peace, or there will be tragedy for Iran far greater than we have witnessed over the last eight days.”

What’s at Stake:

  • Potential Iranian retaliation targeting US assets or personnel
  • Disruption of oil shipments through the Strait of Hormuz
  • Heightened volatility across energy and equity markets

🛢️ Oil Prices Surge on Supply Fears

WTI crude oil rose over 2% to $75.90 per barrel, reaching its highest level since January 2025. The market is responding to concerns that Iran may restrict oil exports or block the Strait of Hormuz, a crucial artery for about 20% of global crude oil flows.

Iran’s parliament has reportedly voted to close the Strait, though final approval is pending from the country’s Supreme National Security Council and Supreme Leader.

📉 Market Caution Builds

Major US indexes ended last week little changed, as investors braced for worsening geopolitical tensions and growing economic uncertainty. Risk appetite remains subdued as markets await further developments in the Middle East.

🇯🇵 Japan’s Manufacturing Sector Returns to Growth

On a more positive note, Japan’s Manufacturing PMI from au Jibun Bank rose to 50.4 in June, up from 49.4 in May, marking the first expansion since May 2024. source: S&P Global

Key Highlights:

  • Output and inventory levels rose
  • Employment edged higher
  • Demand remained weak, especially due to new US tariffs
  • Supplier delivery times lengthened, signaling supply chain pressure

While input cost inflation held near a 14-month low, output prices remained among the softest seen in four years. Business sentiment was largely unchanged and still below the historical average.

đź“Ś Final Takeaway

The Middle East situation is developing rapidly and will likely remain the dominant market driver in the short term. Investors should keep an eye on:

  • Iran’s next move
  • Oil market dynamics
  • Safe-haven assets like gold and the US dollar

Meanwhile, Japan’s modest manufacturing recovery offers a sliver of optimism amid global turbulence.

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    📉 Global Economic Update – June 20, 2025

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    Stay informed with today’s key macroeconomic and market highlights from the U.S., Japan, Germany, and global equity markets.

    🇺🇸 U.S. Manufacturing Remains in Contraction

    The Philadelphia Fed Manufacturing Index held steady at -4.0 in June 2025, unchanged from May and below market expectations of -1. This marks another month of subdued regional manufacturing activity.

    Key Highlights:

    • New orders stayed positive but weakened.
    • Shipments improved and turned positive.
    • Employment fell sharply, reaching its lowest level since May 2020, signaling a drop in factory jobs.
    • Price pressures eased slightly but remain historically high.
    • Outlook: Business optimism is waning, with fewer firms expecting growth in the next six months.

    👉 Takeaway: Continued weakness in manufacturing could influence the Fed’s policy stance going forward.

    🇯🇵 Japan Inflation Eases, Core CPI Surges

    Japan’s annual inflation rate fell slightly to 3.5% in May 2025, down from 3.6% in the previous two months. However, core inflation (excluding fresh food and energy) rose to 3.7%, the highest in over two years.

    Breakdown:

    • Declines in prices for clothing, healthcare, and household goods.
    • Housing, recreation, and communications saw rising costs.
    • Rice prices skyrocketed over 100% year-over-year, showing limited impact from government price controls.

    👉 Takeaway: Inflation remains a concern ahead of Japan’s summer elections, adding complexity to BoJ policy decisions.

    🇩🇪 German Producer Prices Drop Sharply

    Germany’s Producer Price Index (PPI) fell 1.2% year-over-year in May 2025, marking the third straight month of decline and the sharpest drop since September 2024.

    Details:

    • Energy prices fell sharply:
      • Electricity: -8.1%
      • Natural gas: -7.1%
      • Heating oil: -10.2%
    • Excluding energy, producer prices rose 1.3% YoY.
    • Monthly PPI dropped 0.2%, better than the expected 0.3% decline.

    👉 Takeaway: Cooling input prices support the ECB’s disinflation narrative but won’t remove all pressure from sticky core inflation.

    đź“Š U.S. Markets Set for a Lower Open

    After Wednesday’s Juneteenth holiday, U.S. stock futures point to a slightly lower open as investors react to:

    • Ongoing geopolitical tensions in the Middle East.
    • President Trump’s delayed decision on Iran, while strikes from Israel continue.
    • Oil prices retreat, weighing on energy stocks.
    • CarMax expected to open 10%+ higher after strong earnings.
    • Triple Witching Day could increase market volatility.

    👉 Takeaway: Risk appetite remains fragile. Expect choppy trading as geopolitical uncertainty and technical factors weigh on sentiment.

    đź“Ś Final Thoughts

    Economic data continues to paint a mixed global picture—slowing growth, sticky inflation, and rising geopolitical risks. Investors should brace for near-term volatility and monitor central bank signals closely.

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