Global Markets Eye Middle East Tensions and G7 Summit in Canada

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The situation escalated further over the weekend (June 14-15, 2025), while markets were closed. Israel launched massive attacks on Iran, which responded with rocket fire. According to the government of Benjamin Netanyahu-led Israel, the aim is to destroy Iran’s nuclear program. Following last week’s market declines, the Middle East conflict could again impact global markets at the start of this week. On Friday, June 13, 2025, Germany’s leading index closed with significant losses at 23,516 points. The downward trend may continue as DAX remains in negative territory on trading platforms, according to Handelsblatt.

No signs of de-escalation are currently visible. Early Monday morning (June 16, 2025), Israel attacked Iranian targets again. Energy prices, especially oil, remain central. Oil prices had already risen significantly due to Israeli strikes. Additional attacks on storage facilities and refineries in Iran could push prices even higher. Iran continues to threaten closure of the Strait of Hormuz, critical for global crude oil transport, though this could also mean partial self-exclusion from world markets.

Oil prices surged during early Asian trades, climbing by 1%. Prices gained 13% last week, with Brent crude trading at $75 per barrel. American WTI oil rose 1.2% to $73.88 per barrel. Natural gas prices skyrocketed following Israeli destruction of several key Iranian gas installations, potentially affecting European markets. Persistent high energy costs could severely impact the global economy if sustained.

Israeli military leaders warn that attacks could last weeks, making it unlikely oil and gas prices will drop anytime soon. This increases global inflation rates, slowing economic growth as companies face higher raw material costs and consumers spend more on goods and energy.

Besides Middle East tensions, investors watch China’s economic data and new wage trend figures in Europe. U.S. financial markets prepared for Middle East escalation on Friday. The Dow Jones fell 1.8%, closing at 42,198 points, while S&P 500 dropped 1.1% to 5,977 points and Nasdaq declined 1.3% to 19,405 points.

Asian markets remained nervous today amid rising oil prices. Japan’s Nikkei 225 climbed 1% to 38,193 points, and Topix rose 0.6% to 2,772 points. Singapore’s market stayed nearly unchanged at 3,378 points.

Analysts disagree on how Middle East violence will affect markets. While some argue global markets have adapted to higher volatility under former U.S. President Donald Trump, others warn of prolonged conflict impacting markets. Trump urged diplomacy between Jerusalem and Tehran but emphasized no current U.S. military intervention plans. International pressure on Israel and Iran may emerge during today’s G7 summit.

Today, China releases various economic indicators, including real estate prices, unemployment rates, retail sales, and industrial production—key metrics for investors. Eurostat publishes Q1 eurozone wage trends; a 4.1% increase was seen in Q4 2024 versus the prior year. Wage growth signals potential inflationary pressures affecting monetary policy and interest rates, directly impacting stock and bond valuations.

OPEC+ publishes its monthly report analyzing oil market developments, forecasting demand trends, and publishing member state production volumes. Due to Israeli strikes on Iran, oil prices rose more in one day than any time since March 2022. In an extreme scenario where Iran closes the Strait of Hormuz, prices might exceed $130 per barrel.