Closing Recap 

U.S. stocks are poised to open under pressure as reports of an Israeli attack on Iran trigger a flight to safety, sending the dollar and safe-haven currencies higher while gold surges; this geopolitical shock overshadows recent optimism from cooler inflation data and trade de-escalation hopes. 

Key Takeaways 

• Geopolitical Shock Hits Markets: Reports of an Israeli attack on Iran and subsequent emergency declarations are driving significant risk aversion and a flight to safety. 
• Dollar, Yen, Franc Surge: The U.S. dollar, Japanese Yen, and Swiss Franc have strengthened as investors seek safe havens amid escalating Middle East tensions. 
• Gold Jumps Further: Gold prices are extending gains, benefiting from the heightened geopolitical risk and its traditional safe-haven appeal. 
• Equity Futures Likely to Turn Lower: The positive equity market sentiment seen recently is expected to be sharply curtailed by these developments. 
• Focus Shifts from Domestic Data: While cooler U.S. inflation data (PPI yesterday, CPI earlier) had boosted Fed rate cut hopes, geopolitical events are now the primary market driver. 
• Oil Price Reaction Key: Crude oil price movements will be critical, with potential for a spike on supply disruption fears. 
• U.S. Credit Downgrade Aftermath Lingers: The market continues to digest last week’s Moody’s downgrade of the U.S. credit rating. 

Market Overview

A significant geopolitical development has abruptly shifted market sentiment this morning, with reports emerging that Israel has launched an attack on Iran. Explosions have reportedly been heard near Tehran, and Israel’s Defense Minister has declared a special state of emergency in anticipation of potential Iranian retaliation. This news has triggered an immediate flight to safety across global markets, overshadowing the recent optimism that had been fueled by cooler-than-expected U.S. inflation data and hopes for de-escalation in global trade disputes. President Trump expressed skepticism about the prospects for a deal as U.S. and Iranian negotiators were preparing for further nuclear talks, adding to the uncertainty. 

Index	Up/Down	% Change	Last
DJ Industrials	101.85	0.0024	42967
S&P 500	22.98	0.0038	6045
Nasdaq	46.61	0.0024	19662
Russell 2000	-8.14	-0.0038	2140

The market reaction has been most pronounced in currency and commodity markets. The U.S. dollar, which had fallen to multi-year lows earlier in the week on expectations of more aggressive Fed rate cuts, has reversed sharply higher alongside other traditional safe-haven currencies like the Japanese Yen and Swiss Franc. Gold prices are surging as investors seek refuge from the escalating geopolitical risk. U.S. stock futures, which had been pointing to a relatively stable open, are now likely to come under significant pressure as this news unfolds. 

This development injects a major dose of uncertainty into markets that had been showing remarkable resilience. While data like yesterday’s softer-than-expected Producer Price Index had reinforced expectations for Federal Reserve easing later this year, the immediate focus has now pivoted to the potential fallout from this Middle East escalation. The impact on oil prices will be a key factor to watch, given the region’s critical role in global energy supply.

Economic Calendar

While domestic economic data was the focus earlier in the week, today’s primary driver is the geopolitical development in the Middle East. 

• Yesterday’s Major U.S. Releases: (Focus shifts from any scheduled minor releases to geopolitical events)
• Reports of Israeli attack on Iran. 
• Monitoring official statements from U.S., Israeli, and Iranian governments. 

Commodities, Currencies, and Treasuries 

Gold prices surged again, with June futures gaining $58.70 (+1.76%) to settle at $3,402.40 per ounce. The rally was driven by a combination of geopolitical tensions involving Iran, a significantly weaker U.S. dollar (which fell to multi-year lows), and increased safe-haven demand following the cooler inflation data that firmed up Fed rate cut expectations. Platinum prices also hit multi-year highs. Crude oil prices pulled back from 8-week highs, with WTI settling down $0.11 (-0.16%) at $68.04/bbl. While initially supported by geopolitical concerns related to Iran, prices eased later in the session. 

Asset	Up/Down	Unit / % Change	Last
WTI Crude	-0.11	USD/bbl	68.04
Brent	-0.41	USD/bbl	69.36
Gold	58.7	USD/oz	3402.4
EUR/USD	0.009	USD	1.1577
USD/JPY	-1.04	JPY	143.5
10-Year Note	-0.057	%	0.04357

The U.S. dollar index (DXY) extended its recent sharp decline, hitting lows of 97.60 (lowest since March 2022) as the Euro surged to its highest since late 2021, and the Yen and Swiss Franc also gained against the greenback. Treasury yields fell across the curve, with the 10-year yield dropping over 5 basis points to below 4.35%. Bond markets rallied following the softer PPI data and a well-received 30-year Treasury auction that showed strong demand.

Looking Ahead 

The market will be entirely driven by developments in the Middle East. Official confirmations, statements from involved governments, and any signs of escalation or de-escalation will dictate price action across all asset classes. The impact on oil supply and the potential for broader regional instability are the primary concerns. Previously scheduled economic data and earnings will likely take a backseat to these geopolitical events. Extreme volatility is expected.