- Oil Rises, US Futures Drop on Trump Tehran Warning: Markets Wrap
Oil extended its recent gains amid concern escalating tensions in the Middle East will trigger more direct US
involvement. Asian stocks were mixed before a Federal Reserve monetary policy decision. West Texas
Intermediate crude climbed as much as 1.1% in Asia after settling at the highest level in almost five months on
Tuesday. Shares slipped in Hong Kong but gained in Japan after the S&P 500 closed 0.8% lower in New York.
Weaker-than-forecast US economic data on Tuesday added to the equity decline and boosted bonds.
Treasuries edged lower in Asia but still held the bulk of their gains from Tuesday that were driven by geopolitical
risks and tepid reports on retail sales, housing and industrial output. Bloomberg’s index of the dollar was little
changed after rising the most in a month in the US session. Oil extended its advance over the past week to
about 10% after President Donald Trump on Tuesday demanded Iran’s “UNCONDITIONAL SURRENDER” and
warned of a possible strike against the country’s leader — Ayatollah Ali Khamenei — in a social media post. US
weapons are seen as crucial to achieving a more complete destruction of the Islamic Republic’s atomic program
than anything Israel can do alone. - Dow closes nearly 300 points lower Tuesday as Israel-Iran conflict intensifies
Stocks were lower on Tuesday as investors pored through the latest developments in the Middle East, with the
Israel-Iran conflict raging on for a fifth day. The Dow Jones Industrial Average lost 299.29 points, or 0.70%, to
close at 42,215.80. The S&P 500 shed 0.84% to end at 5,982.72, while the Nasdaq Composite fell 0.91% and
settled at 19,521.09. - Oil prices extend rise as Iran-Israel conflict enters sixth day
Oil prices ticked up in early trading on Wednesday after ending the previous session up more than 4% on
worries that the Iran-Israel conflict could disrupt supplies. Brent crude futures rose 19 cents, or 0.25%, to
$76.64 a barrel by 0029 GMT. U.S. West Texas Intermediate crude futures rose 23 cents, or 0.31%, to $75.07
per barrel. U.S. President Donald Trump on Tuesday called for Iran’s “unconditional surrender” as the Iran
Israel air war entered a sixth day. The U.S. military is deploying more fighter aircraft to the region to bolster its
forces, three officials said on Tuesday. Analysts said the market was largely worried about supply disruptions
in the Strait of Hormuz, which carries a fifth of the world’s seaborne oil. Two oil tankers collided near the strait
and caught fire on Tuesday. The United Kingdom Maritime Trade Operations had warned on Monday that
electronic interference is affecting ships’ navigation systems. Iran is OPEC’s third-largest producer extracting
about 3.3 million barrels per day (bpd) of crude oil, but analysts say other members of the Organization of the
Petroleum Exporting Countries could use their spare capacity to make up for a drop in Iranian output. Markets
are also looking ahead to a second day of U.S. Federal Reserve discussions on Wednesday, in which the central
bank is expected to leave its benchmark overnight interest rate in the 4.25%-4.50% range. However, the conflict
in the Middle East and the risk of slowing global growth could push the Fed to potentially cut rates by 25 basis
points in July, sooner than the current market expectation of September, said Tony Sycamore, market analyst
with IG. - Gold steadies as firmer dollar counters Middle East tensions
Gold prices steadied on Tuesday as a stronger dollar offset safe-haven demand driven by Iran-Israel tensions,
while silver surged to a 13-year high. Spot gold was up 0.2% at $3,390.29 an ounce as of 2:18 PM EDT. U.S. gold
futures fell roughly 0.3% to $3,408.70. The U.S. dollar index rose about 0.8%. “Prices are seeing some
consolidation for now as we await the Fed decision and watch developments in the Middle East conflict,” said
Jim Wyckoff, senior analyst at Kitco Metals. U.S. President Donald Trump said that he wanted a “real end” to
the nuclear dispute with Iran, and indicated he may send senior American officials to meet with the Islamic
Republic as the Israel-Iran air war raged for a fifth day. Elsewhere, the Federal Reserve will announce its policy
decision on Wednesday, followed by Chair Jerome Powell’s press conference. The U.S. central bank is widely
anticipated to leave its benchmark overnight interest rate in the 4.25%-4.50% range, where it has been since
December. A low interest rate environment and geopolitical uncertainty tend to boost gold’s appeal. Central
banks around the world expect their gold holdings as a proportion of their reserves to increase over the next
five years, a survey by the World Gold Council showed. Data showed that U.S. retail sales dropped more than
expected in May, but consumer spending remained supported by solid wage growth. Spot silver gained 2% to
$37.08 per ounce. At one point, the metal reached its highest level since February 2012. Citi in a note said silver
could rise to $40 over the next six to 12 months. “We expect silver availability to tighten on consecutive years
of deficit, sticky stockholders requiring higher prices to sell, and robust investment demand,” it added.
Platinum added 1.6% to $1,264.08 and palladium rose 1.7% to $1,046.96. - U.S. Treasury yields slide after retail sales tumbled in May, raising recession fears
U.S. Treasury yields fell on Tuesday after retail sales narrowed more than Wall Street economists had expected,
lifting bond prices and raising concern that the economy is headed for a slowdown or even a recession. The
yield on the benchmark 10-year Treasury note fell more than 6 basis points to 4.387%, while the 2-year
Treasury yield was lower by more than 2 basis points to 3.946%. One basis point is equivalent to 0.01%, and
bond yields and prices move inversely, meaning prices are higher Tuesday. Retail sales dropped by 0.9% in May
according to the Census Bureau, worse than the 0.6% contraction that had been estimated by economists
surveyed by Dow Jones. Excluding automobiles, sales last month eased by 0.3%, underperforming the Street’s
expectation for a 0.1% increase. Gas station sales slid 2% in the month, which can reflect both lower prices but
possibly slower economic activity. Also lifting the bond market was President Donald Trump’s early departure
from the Group of Seven summit Monday, signaling a possible escalation in the Israel-Iran conflict. Trump said
his early exit was due to “much bigger” events in the Middle East, while calling on Iranians to “immediately
evacuate Tehran” in anticipation of Israeli bombardment. - Japan exports fall at sharpest pace in 8 months as U.S. shipments plummet
Exports from Japan in May declined 1.7% year over year, marking the sharpest decline since September 2024
as the country continues to grapple with trade uncertainties. The fall was softer than the 3.8% decline
forecasted by economists polled by Reuters, but was a reversal compared to the 2% gain recorded in April.
Data from Japan’s trade ministry revealed that exports to the U.S. continued to decline, falling 11.1% year over
year. Exports to China, Japan’s largest trading partner, was down 8.8%. Japan’s global automobile exports
dropped 6.9%, but notably, exports of motor vehicles to the U.S. plummeted 24.7% compared to the same
period last year. Japanese carmakers accounted for 28.3% of all exports to the U.S. in 2024, according to
customs data. Besides the current 25% levy on its auto, steel exports to the U.S., Japan is also facing a 24%
‘reciprocal’ tariff rate on all other exports starting on July 9. The data comes a day after the Bank of Japan
highlighted in its monetary policy statement that the country’s growth was likely to “moderate,” due to factors
like trade, which would lead to a slowdown in overseas economies and a decline in domestic corporate profits.
“It is extremely uncertain how trade and other policies in each jurisdiction will evolve and how overseas
economic activity and prices will react to them,” the BOJ added. Stefan Angrick, Head of Japan and Frontier
markets economics at Moody’s Analytics, said that tariffs are the “main threat” to Japan’s outlook. - Trump threatens Iran’s leader, demands ‘unconditional surrender’
President Donald Trump on Tuesday warned Iranian leader Ali Khamenei that he is an “easy target” and that
“our patience is wearing thin,” before demanding Tehran surrender in its conflict against Israel. “We know
exactly where the so-called ‘Supreme Leader’ is hiding,” Trump wrote on Truth Social. “He is an easy target,
but is safe there – We are not going to take him out (kill!), at least not for now,” he wrote. “But we don’t want
missiles shot at civilians, or American soldiers. Our patience is wearing thin.” Trump added in a subsequent
post: “UNCONDITIONAL SURRENDER!” - Sam Altman says Meta offered OpenAI staff $100 million bonuses, as Mark Zuckerberg ramps up AI
poaching efforts
Meta Platforms tried to poach OpenAI employees by offering signing bonuses as high as $100 million, with
even larger annual compensation packages, OpenAI chief executive Sam Altman said. While Meta had sought
to hire “a lot of people” from OpenAI, “so far none of our best people have decided to take them up on that,”
Altman said, speaking on the “Uncapped” podcast, which is hosted by his brother. “I’ve heard that Meta thinks
of us as their biggest competitor,” he said. “Their current AI efforts have not worked as well as they have hoped
and I respect being aggressive and continuing to try new things.” Meta did not immediately respond to a
request for comment from CNBC. The Meta CEO is personally trying to assemble a top artificial intelligence
team for its “superintelligence” AI lab and has invested heavily in AI through its Meta AI research division,
which also oversees its Llama series of open-source large language models. The moves come after Meta had
once again delayed the release of its latest flagship AI model due to concerns about its capabilities, according
to a report from the Wall Street Journal. Meanwhile, sources have previously told CNBC that Zuckerberg has
become so frustrated with Meta’s standing in AI that he’s willing to invest billions in top talent. Last week
Alexandr Wang, founder of Scale AI, announced he was leaving for Meta as part of a deal that saw the Facebook
parent dish out $14.3 billion for a 49% stake in the AI startup. Wang added that a small number of Scale AI
employees would also join Meta as part of the agreement. - Energy stocks extended gains, bucking losses across the broader European market, as the Israel-Iran
conflict fanned fears of crude supply disruptions, lifting oil prices
Stoxx 600 Energy index rose for a sixth consecutive session to mark its best streak in over seven weeks. Biggest
points gainers are Shell, BP, TotalEnergies, Equinor and Eni. Gains on oil stocks are more than countering a drop
in renewable stocks such as Vestas, after US Senate Republicans released a bill that would end tax credits for
wind and solar earlier than for other sources. Brent traded higher to over $76 a barrel. - SoftBank Group Corp. raised around $4.8 billion through a sale of T-Mobile US Inc. shares, a move that
helps fund the Japanese company’s grandiose plans for artificial intelligence
The Tokyo-based technology group sold 21.5 million T-Mobile shares for $224 each — pricing at the bottom of
the $224 to $228 range — in an unregistered overnight block sale, according to the final terms of the deal seen
by Bloomberg News. The offering, which Bloomberg reported earlier, represents a discount of 3% to T-Mobile
US’s Monday closing price of $230.99 per share. The stake offered represents about 1.9% of T-Mobile’s
outstanding shares, according to Bloomberg calculations. SoftBank owned 85.4 million shares or 7.5% of T
Mobile as of March 31, according to its annual report. T-Mobile shares fell 4.1%. - First Solar Inc (FSLR US)
The Senate Finance Committee released its version of President Donald Trump’s massive tax and spending bill
on Monday. Like the bill passed by the House of Representatives last month, the proposed legislation would
pare back tax credits introduced by the Inflation Reduction Act, signed into law by former President Joe Biden
in 2022. It is now being debated in committees and could get a vote by the full Senate in the next two to three
weeks. After that, the Senate and House versions will have to be reconciled into one bill. The Senate Finance
Committee’s rules for residential solar tax credits appear to be even more restrictive than the bill passed by
the House, which itself was considered very restrictive. Stocks of companies that develop, install, and equip
the solar panels that people place on their roofs were sold off on Tuesday. The lack of tax credits will make the
panels less cost-competitive against other sources of power. A homeowner installing a $20,000 system today
could qualify for a $6,000 credit on their taxes; the legislation would change that, making the homeowner take
on the entire $20,000 cost. Solar stocks including Sunrun, SolarEdge, Enphase Energy and First Solar all
tumbled. - United Airlines Holdings Inc. shares fell 6.2% after JetBlue said it would be slashing costs on weaker-than
expected travel demand
JetBlue Airways Corp. plans to cut costs by eliminating underperforming flights, ending service to some cities,
and restructuring leadership ranks due to weaker-than-expected travel demand. The carrier is also reducing
budget at support centers, assessing hiring and vendor spending, and combining or restructuring leadership
roles, with a halt on cosmetic refreshes of some aircraft. JetBlue’s CEO warns that even if demand rebounds,
the path to profitability will take longer than hoped, and the airline is still relying on borrowed cash to operate.
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