Equities: Strong Week Ends on a Cautious Note
Global stocks ended a strong week cautiously as relief over the US–Iran interim peace deal gave way to focus on the challenges of securing a lasting agreement. S&P 500 futures fell 0.2%, with US cash markets closed for the Juneteenth holiday. Europe’s Stoxx 600 dipped 0.2%, while the MSCI Asia Pacific Index fell 0.3% from an all-time high. Markets in China, Hong Kong and Taiwan were also shut.
The S&P 500 had posted its best week since the end of May before Friday’s pullback. Bloomberg strategists raised their year-end targets to an average of 7,716, up from 7,612 in May — implying roughly 3% upside from the last close and a near 13% gain for the calendar year. Earnings estimates also increased for both 2026 and 2027. Roberto Scholtes at Singular Bank noted: “Markets seem to be entering a rare couple of weeks with no major catalysts ahead — hopefully, this is a chance to take a breather after a hectic year, and possibly also a period of sector rotation.”
In corporate news, AbbVie is nearing a deal to buy Apogee Therapeutics for almost $11 billion to bolster its anti-inflammatory portfolio. Commerzbank investors representing 12.51% of shares accepted UniCredit’s €42 billion takeover offer. US Commerce Secretary Howard Lutnick raised concerns with ASML that one of its top-of-the-line machines may have made its way into China in violation of export restrictions.
Geopolitics: US–Iran Talks Open at Bürgenstock Amid Fresh Threats
The US and Iran began direct talks in the Swiss resort of Bürgenstock on Sunday on a peace deal to settle the nuclear programme issue and permanently reopen the Strait of Hormuz. Vice President JD Vance and Iranian Foreign Minister Abbas Araghchi were among attendees, with Qatar and Pakistan mediating. Vance told reporters: “What today really represents is the beginning of a technical negotiation that’s not going to solve every disagreement.”
The talks got off to a confusing start when Iranian media reported that Iran had halted proceedings over Trump’s latest threats, though people familiar with the matter said discussions were continuing. Trump warned on social media that he would strike Iran again if it doesn’t “immediately stop their highly paid PROXIES in Lebanon from causing trouble,” and told Fox News he warned Iranian leaders directly that if they close Hormuz, “You won’t even make it back.”
A resolution to the fighting in Lebanon will be decisive for the success of the talks, according to an official familiar with the discussions. That means a positive outcome ultimately hinges on Israel’s support — Israel was not a party to the interim agreement. The 14-point memorandum of understanding outlines a 60-day negotiating window covering nuclear capabilities, the lifting of US sanctions, $300 billion in economic development financing for Iran, and the return of frozen Iranian assets.
Alexandre Drabowicz at Indosuez Wealth Management struck a cautiously optimistic tone earlier in the week: “Of course, with Trump there can always be some derailment along the way, but we believe that we’re set into a new phase of de-escalation.” Iranian envoys were reportedly focused on domestic optics, refusing to participate in opening televised remarks to avoid being seen shaking hands with US delegates before agreements had been reached.
President Trump warned Iran on Sunday that the US might start collecting tolls on Hormuz if there’s no deal, and threatened strikes if Hezbollah continues operations in Lebanon. The intervention rattled proceedings — Iranian media briefly reported talks had been halted, though they ultimately continued. A Lebanon ceasefire is now a precondition for the interim deal to hold.
Energy, Commodities & FX: Oil Bounces on Hormuz Jitters
Brent crude rose 0.9% to above $80 a barrel on Friday, paring a 7.7% weekly drop through Thursday that had been driven by the interim US–Iran peace deal. WTI climbed 1.2% to $76.54 — its largest single-day closing gain since 10 June. Traffic through the Strait of Hormuz thinned on Friday, just a day after a burst in flows through the waterway, and Tehran said ships crossing the strait need its permission. The oil story remains far from settled.
Gold fell 1.3% on Friday to $4,155.71 an ounce, heading for a third straight weekly loss as risk appetite returned and the stronger dollar weighed on the metal. At the ASX close on Friday, gold was quoted at US$4,172/oz. Bitcoin snapped a three-day losing streak but was little changed at $62,991.56. The euro rose 0.2% to $1.1476, the Japanese yen was flat at 161.29 per dollar, and the Bloomberg Dollar Spot Index was little changed.
The bond market saw notable moves in Europe: UK gilt yields surged 9 basis points to 4.84% after Greater Manchester Mayor Andy Burnham won a seat in Parliament, opening a pathway to challenge PM Keir Starmer. Investors are debating whether a Burnham premiership might shift to looser fiscal policy. Germany’s 10-year yield rose 6bp to 2.99%, while the US 10-year Treasury yield held steady at 4.45%.
Adam Linton, Bloomberg macro strategist: “Gilts are extending their declines and underperforming regional peers. However, the extent of the moves are being exacerbated by gains in oil since yesterday afternoon. Markets require greater detail on how protracted any leadership race will be, with a more drawn-out affair worse for gilts.”
Macro: Fed Hawkish Pivot Under New Chair Warsh
New Fed Chair Kevin Warsh’s first FOMC meeting held rates at 3.50–3.75% by a unanimous 12–0 vote, but the message underneath was more aggressive than markets expected. The dot plot has completely flipped: the median member now expects a rate hike before year-end, and any cutting bias has been stripped from the statement. May CPI came in at 4.2% year-on-year, driven primarily by energy costs from the Iran conflict.
JP Morgan noted that 9 of 18 officials now favour hikes in 2026, with cuts pushed out to 2027–28. The hawkish pivot compounds the challenge for risk assets already grappling with geopolitical uncertainty. For Australian investors, the RBA is sending similarly cautious signals, with May CPI data due on Wednesday (24 June) the critical domestic data point this week.
The FOMC dot plot now shows the median member expecting a rate hike before year-end — a complete reversal from prior meetings. With May CPI at 4.2% YoY and energy the primary driver, the committee has stripped any easing bias. JP Morgan reads 9 of 18 officials as favouring hikes in 2026, with cuts deferred to 2027–28.
ASX Outlook & Day Ahead
The ASX 200 eked out a 0.28% weekly gain but gave back a lot on Friday, falling 0.9% to close at 8,828.7 points. BHP dropped 5.6% to A$61.40 after flagging a major cost blowout at its Jansen potash project in Canada, with costs now near C$7 billion — the news dragged the materials sector down 4% on Friday alone. Healthcare was the standout sector, up 4.84% for the week, though it remains down 39% over 12 months after hitting a 9-year low on 3 June.
Energy names (Santos, Woodside) could get a lift this morning given oil’s overnight bounce on renewed Hormuz uncertainty. Gold’s 1.7% fall on Friday to US$4,172/oz will weigh on Newmont (NEM) and Northern Star (NST). Metcash (MTS) reports full-year results today — UBS expects EBIT of $502 million, with the market focused on FY27 trading commentary.
ASX 200 futures point to a 0.2% lower open this Monday morning. The AUD is trading around $1.1476 against the euro. Wall Street was closed on Friday for the Juneteenth public holiday, so there is no fresh US cash session to digest. The Hormuz/oil situation and central bank hawkishness are the two threads to watch closely this week.
- Monday 22 June — Metcash (MTS) full-year results; UBS expects EBIT of $502M. Market focused on FY27 trading outlook.
- Wednesday 24 June — Australian May CPI data. Critical release given RBA hawkishness and the Fed’s recent pivot.
- Thursday 25 June — Australian labour market data. Employment and participation readings will shape RBA rate expectations.
- Ongoing — US–Iran peace talks at Bürgenstock. Any breakdown or breakthrough will move oil and risk sentiment immediately.
- Ongoing — Strait of Hormuz shipping movements. Iran has asserted transit permission requirements — any blockage reignites the energy shock trade.
