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US strikes Iranian nuclear facilities entering Israel-Iran war

The United States launched "precision airstrikes" on Saturday targeting Iran's nuclear facilities, marking its direct entry into the ongoing conflict between Israel and Iran. According to US President Trump, it was a joint operation with Israel to neutralise a "horrible threat." The move significantly heightens tensions in the region, with Iran warning of severe retaliation. The escalation has raised concerns over potential disruptions in global oil supply, particularly in the Strait of Hormuz, a critical transit point for global energy shipments. Asia-Pacific stock markets declined on Monday following geopolitical news and moderate losses on Wall Street. 
 

  • Date
  • Author Alessandro Fezzi, LGT Content & Publications
  • Reading time 5 minutes

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The United States launched airstrikes on Iranian nuclear facilities in Fordo, Natanz, and Isfahan, claiming to have destroyed key sites. US President Donald Trump justified the attacks as a measure to prevent Iran from acquiring nuclear weapons, warning of further escalation if Iran does not pursue peace. While Tehran vowed to continue its nuclear programme, the legality of the strikes remains contested under international law. The attacks follow Israel's earlier military actions, with experts noting that the US used advanced bunker-busting bombs and stealth bombers in its largest operation of this kind. Washington remains open to negotiations but also aims to curb Iran's regional influence and secure global energy routes.

Middle East tensions weigh on Asia-Pacific equity markets

Stock indices in the Asia-Pacific region declined on Monday as the United States’ bombing of three Iranian nuclear sites heightened geopolitical tensions in the Middle East, driving up oil prices and investor concerns. Brent crude rose nearly 2% to USD 78.51 per barrel, while the Nikkei 225, Kospi, and Hang Seng indices posted losses of 0.3%, 0.4%, and 0.1%, respectively. Asia-Pacific currencies weakened against the US dollar, reflecting broader risk aversion.

US equity markets closed Friday’s session with moderate losses

US stock indices ended last week with moderate losses, reflecting cautious investor sentiment amid the ongoing conflict between Israel and Iran. The Dow Jones Industrial Index rose slightly by 0.1% to 42,206.82 points, while the S&P 500 and Nasdaq 100 fell by 0.2% and 0.4%, respectively. Semiconductor stocks weakened as reports suggested potential US restrictions on technology exports to China. Alphabet shares dropped nearly 4% due to legal risks in the EU, while Accenture declined 7% following disappointing forecasts.

Philly Fed index signals continued contraction

The Federal Reserve Bank of Philadelphia's manufacturing index remained unchanged in June at minus 4.0 points, indicating ongoing contraction in the region's industrial activity. Economists had anticipated an improvement to minus 2.0 points. Subindices showed a decline in both input costs, with the paid prices index dropping to 41.4 from 59.8, and output prices, which fell to 29.5 from 43.6, reflecting easing price pressures in the manufacturing sector.

German producer prices decline further

Producer prices in Germany fell by 1.2% year-on-year in May, driven by a continued drop in energy costs, according to data released by the Federal Statistical Office on Friday. This marks the third consecutive month of declining prices, with energy prices 6.7% lower than a year ago and electricity prices down 8.1%. On a monthly basis, producer prices dropped by 0.2%, slightly less than analysts had anticipated. The data reflects ongoing disinflationary pressures, which may influence consumer prices and the European Central Bank's monetary policy.

UK retail sales see sharpest fall since 2023

British retail sales volumes dropped by 2.7% in May, marking the steepest monthly decline since December 2023, according to data released on Friday. The fall follows a surge in April driven by strong demand for food, summer clothing, and home improvement items. Sales volumes were also 1.3% lower year-on-year, the largest annual drop since April 2024, as poor performance in food retail, reduced spending on alcohol and tobacco, and lower demand for DIY items contributed to the decline. Despite May's slump, analysts suggest consumer spending may still outperform other sectors of the economy this year.

Corporate and economic calendar

Corporate news in focus: There is no major corporate news scheduled today.

Economic data in focus: French Purchasing Managers’ Index (09:15), German Purchasing Managers’ Index (09:30), euro-area Purchasing Managers’ Index (10:00), UK Purchasing Managers’ Index (10:30), Bundesbank monthly report (12:00), US Purchasing Managers’ Index (15:45), US existing home sales (16:00).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.