OPENING CALL
Stock futures were pointing to a higher open Monday, showing investors were largely taking the conflict between Israel and Iran in their stride.
The two countries struck each other's energy facilities over the weekend bringing the conflict closer to an industry vital to the global economy and markets.
On Saturday, a senior commander in the Islamic Revolutionary Guard Corps warned Iran was considering closing the Strait of Hormuz through which a third of the world's oil flows.
The situation is likely to be in the spotlight with global trade at the G-7 leaders' meeting in Canada, which leaders are hoping will provide a setting for trade deals with Trump.
Stocks to Watch
Sarepta Therapeutics (SRPT), Roche's partner for a paused gene therapy , fell 29%.
U.S. Steel : Japan's Nippon Steel plans to complete its purchase of the company after reaching an agreement with the Trump administration to resolve national-security concerns. Shares of U.S. Steel rose 5%.
Victoria's Secret & Co : An activist investor has built a stake in the lingerie retailer, with plans to push the company to refresh its board and refocus.
Watch For:
Empire State Manufacturing Survey; Canada Housing Starts for May; earnings from Lennar.
Today's Headlines/Must Reads:
- Israel Takes Control of Iran's Skies-a Feat That Still Eludes Russia in Ukraine
- Chinese Spenders Open Wallets as Factories Slow
- Young Graduates Are Facing an Employment Crisis
MARKET WRAPS
Forex:
The dollar's recent appreciation on the Israel-Iran conflict was likely mainly due to the oil-price rally as opposed to its safe-haven role, Commerzbank said.
"The dollar benefits from a rise in oil prices, as this improves the ratio of export to import prices, i.e. the U.S.'s terms of trade."
Moreover, the dollar didn't rise across the board Friday, falling versus the more oil-dependent Canadian dollar and Norwegian krone.
That explains why the dollar's strength has corrected as oil prices have given up part of Friday's gains, it added.
The euro's potential for further gains against the dollar was likely to be limited as oil prices, ING said, adding it estimates the currency's short-term fair value as just below $1.10
"The eurozone's dependence on energy exports should put a curb on the [euro's upside versus the dollar]."
The yen was likely to rise if the BOJ signals the prospect of raising interest rates again in a policy decision Tuesday, ING said.
"We think the yen remains a rather attractive hedge at the moment, especially if U.S. equities face more hits from geopolitics."
The Swiss franc was unlikely to weaken significantly, even if the SNB reintroduced negative interest rates at Thursday's meeting, Commerzbank said.
XTB said the situation in the Middle East would need to deteriorate rapidly and enter a more dangerous phase for Bitcoin to fall below $100,000.
Bonds:
KBC Bank said geopolitical headlines trump Monday's light economic data calendar as well as the Treasury's coming 20-year bond auction.
"The ever more uncertain context risks complicating tonight's auction more than last week's well-received 10-year and 30-year sales."
Treasury yields were attractive relative to Russell Investments' fair value estimate of 4.1% on the 10-year bond, it said, adding that its baseline was for moderating growth and underlying inflation, which supports a transition back to rate cuts eventually.
J.P.Morgan expected positive bond returns across the board for the rest of 2025.
They expected the strongest performance in the U.K. with 5%, followed by the U.S. with 3.8%.
Energy:
Crude futures edged lower in a volatile session, as investors monitored the latest developments in the Israel-Iran conflict.
"This conflict could either de-escalate as diplomacy takes the reins, have hostilities continue but stay contained between Iran and Israel, or have the conflict reach new levels with the engagement of multiple countries," Rystad Energy said.
"The muted price movement today does not signal that the market has priced in an escalation toward the worst-case scenario for oil."
ANZ said the main issue the market will have to watch for is whether Iran's retaliation broadens outside of Israel to disrupt oil flows in the Persian Gulf's Strait of Hormuz.
"Over 17 million b/d of oil supply transiting the Strait would be at risk," it added.
Julius Baer maintained its neutral view on oil but raisd its three-month price target to $72.50 a barrel to account for a temporary risk premium.
DBS projects oil-price spikes above $75 a barrel as possible but not sustained given OPEC+ production-cut reversals and trade war-related demand fears.
Rystad Energy said China and India account for most of the destination volumes through the Strait.
Metals:
Gold futures pared gains after rising close to a record.
Gold Chart
RHB said if the commodity broke above $3,500, it would open the door for further gains, possibly toward $3,600.
Pepperstone said traders cut back on profitable longs in silver, platinum and palladium, potentially to raise cash in their portfolios or even flipping the exposure into gold, it added.
TODAY'S TOP HEADLINES
Renault CEO Luca de Meo to Step Down
Renault Chief Executive Luca de Meo plans to step down in mid-July and pursue new challenges outside the automotive industry, with French newspaper Le Figaro reporting he is set to become the new boss of Gucci-owner Kering.
The struggling French luxury group is reportedly set to split the chairman and CEO roles currently held by Francois-Henri Pinault, who belongs to the family that controls the group and has held the joint position for 20 years.
Santos Gets $18.72 Billion Takeover Offer From Adnoc-Led Consortium
SYDNEY-Santos, Australia's second-largest producer of oil and natural gas, said on Monday that it has received a takeover offer from a consortium led by Abu Dhabi National Oil Co unit XRG worth some $18.72 billion.
Santos said the consortium is offering 8.89 Australian dollars a share, equivalent to $5.76, in cash. That offer, described by Santos as final, follows two proposals made in March worth A$8.00 a share and A$8.60 a share, respectively.
Southwest Airlines Adds Cockpit Alerts to Boost Runway Safety
Southwest Airlines is adding a new cockpit alert system to help its pilots avoid dangerous situations, after carriers navigated a series of close calls at U.S. airports in recent years.
The Honeywell-designed system delivers verbal warnings and text alarms if a pilot is about to use the wrong runway, for example, or take off from or land on a taxiway. The Dallas-based carrier said the system has been added to nearly all of Southwest's approximately 800 aircraft.
AI Companies Should Be Wary of Gulf Spending Spree
A handful of Middle Eastern countries have emerged as some of the world's biggest spenders on artificial intelligence. The companies benefiting from the windfall should be wary-as should their investors.
Gulf countries including Saudi Arabia, the United Arab Emirates and Qatar are in splash-out mode, spending billions of dollars on data-center projects with Microsoft and OpenAI, as well as chip purchases from Nvidia, Advanced Micro Devices and others to fuel their AI ambitions.
An Island With Strong Ties to Europe Counts Its Dead After Air India Crash
DIU ISLAND, India-The only survivor of Air India Flight 171 was born on this tropical island dotted with palm trees and fishing boats. So were 14 passengers who died in the crash, most of them Portuguese or British nationals of Indian origin.
They straddled two continents, their lives consisting of long-haul flights between work and family. Like many of the 241 people who perished on the London-bound Boeing 787, they were part of the large Indian diaspora that has spread all across the world.
Cyberattack on Washington Post Strikes Journalists' Email Accounts
A cyberattack on the Washington Post compromised email accounts of several journalists and was potentially the work of a foreign government, company officials told some affected staffers in recent days, according to people familiar with the situation.
Staffers were told the intrusions compromised journalists' Microsoft accounts and could have granted the intruder access to work emails they sent and received, some of the people said. The reporters targeted include those on the national-security and economic-policy teams, including some who write about China, the people said.
Write to clare.kinloch@wsj.com
TODAY IN CANADA
Earnings:
- Nothing major scheduled
Economic Indicators (ET):
0815 May Housing Starts
Stocks to Watch:
Sprott Physical Uranium Trust: Canaccord Genuity to Buy 5.8M Units at US$17.25 Each; Expects Gross Proceeds of About US$100M; To Use Proceeds to Acquire Physical Uranium;Trust Expects Offering to Close on or Around June 20
WestJet: Fitch Revises WestJet's Outlook to Negative
Expected Major Events for Monday
04:30/JPN: Apr Revised Retail Sales
08:00/ITA: May CPI
08:30/UK: 1Q Business Finance Review
12:15/CAN: May Housing Starts
12:30/US: Jun Empire State Manufacturing Survey
13:00/RUS: Weekly International Reserves
14:00/US: May Online Help Wanted Index
All times in GMT. Powered by Onclusive and Dow Jones.
Expected Earnings for Monday
ATI Physical Therapy Inc (ATIP) is expected to report for 1Q.
Coda Octopus Group Inc (CODA) is expected to report for 2Q.
Digital Turbine Inc (APPS) is expected to report $-0.18 for 4Q.
Ennis Inc (EBF) is expected to report for 1Q.
Friedman Industries Inc (FRD) is expected to report for 4Q.
Hugoton Royalty Trust (HGTXU) is expected to report for 1Q.
InnSuites Hospitality Trust (IHT) is expected to report for 1Q.
Lennar Corp - Class A (LEN,LENB) is expected to report $1.94 for 2Q.
PowerFleet Inc (AIOT) is expected to report $-0.02 for 4Q.
Psychemedics Corp (PMDI) is expected to report for 1Q.
(MORE TO FOLLOW) Dow Jones Newswires
06-16-25 0612ET
