The United States and Iran agreed on June 28 and 29 to halt recent hostilities and resume diplomatic talks over disputes including the Strait of Hormuz after days of tit-for-tat strikes involving missile and drone attacks on military bases and commercial shipping routes [1, 2, 3, 4]. The agreement followed intense exchanges over the weekend preceding June 29, including US strikes on Iranian targets and Iranian retaliation against bases in Kuwait and Bahrain, both of which condemned the Iranian attacks [1, 3]. US President Donald Trump warned renewed strikes would lead to Iran's destruction if conflict resumed [1, 3].
Despite the ceasefire, the truce remains fragile as both countries plan further negotiations in Qatar on July 7 to address ongoing disputes and ease tensions [2, 3, 4]. Investors maintained a cautious stance, reflecting concerns about the durability of the ceasefire [2, 3, 4]. Nick Twidale, chief market strategist at ATFX Global, said, "It feels like we are lacking a bit of direction...at the moment I think it's going to be a bit of a flow-driven day without major moves to either side" [2].
Oil prices rose amid the attacks and geopolitical risks, with Brent crude trading around $72.6 to $72.8 per barrel and West Texas Intermediate near $70.01 [1, 2, 5, 3, 4]. Asian stock markets were mixed and volatile, led by a nearly 2% drop in South Korea's Kospi index, while other regional markets showed modest gains [2, 6, 3, 7]. Concerns about stretched valuations and uncertain returns on AI investments also weighed on equities globally. Kyle Rodda, senior financial market analyst at capital.com, noted, "The narrative...is focused on artificial intelligence return on investment and whether cost pressures are starting to cascade down the supply chain" [6]. Fiono Cincotta from City Index added, "investors are becoming increasingly focused on valuations and whether...investment in AI infrastructure will translate into earnings growth quickly enough to justify current share prices" [7].
Gold prices declined roughly 0.4 to 0.9% to near $4,060 per ounce, pressured by inflation concerns and expectations of Federal Reserve rate hikes [1, 5, 4]. Silver, platinum, and palladium also fell modestly [1, 5]. US inflation data released June 29 showed the consumer price index rising above 4.0% in May for the first time in three years, fueling expectations of about three Fed rate hikes this year, with a roughly 77% chance of a December increase [1, 5, 7]. Asian currencies remained broadly stable, buoyed by the lack of a sustained spike in oil prices [6].
The US Central Command confirmed it had attacked 10 Iranian military targets in response to Iranian aggression against commercial shipping in the Strait of Hormuz [3]. Meanwhile, Iran’s foreign ministry engaged with Oman over managing traffic through the Strait, opposing Oman's plans for alternative shipping routes [3].
The US and Iran are set to deepen talks in Qatar on July 7 to address disputes related to the Strait of Hormuz and seek further resolution of hostilities [1, 2, 3, 4].
