Global markets woke up Friday, June 20, 2025, with something rare: a sense of calm. After weeks of tension surrounding Middle East geopolitics and central bank decisions, investors finally got some breathing room. But is it too soon to celebrate?
U.S. President Donald Trump said we’ll need to wait two more weeks before he decides whether to launch a military attack on Iran. While that uncertainty isn’t ideal, the delay is being taken as a sign that immediate conflict is off the table, for now.
Markets love delays when the alternative is war. Oil prices have been climbing on conflict fears and fell 2.5% after Trump’s statement. Brent crude is still up 3.7% for the week, but this dip gave stocks room to rally.
Falling oil prices boosted European futures in the morning of June 20. EUROSTOXX 50 futures went up 0.7%, FTSE futures increased by 0.3%, and S&P 500 and Nasdaq futures saw a 0.2% hike.
Investors are playing it safe, but are cautiously optimistic. This is because lower oil prices can ease inflation pressure and boost consumer spending, especially in energy-dependent European economies.
Nevertheless, several central banks in Europe are hinting at easier monetary policy, a surprising twist after over a year of aggressive rate hikes.
For instance, Norway just had its first rate cut since 2020, and Switzerland cut its rates to zero, and this number might even go negative.
The UK, on the other hand, held steady but may open the door to rate cuts if energy prices rise again due to Middle East tensions.
Meanwhile, China held rates steady, and Japan’s inflation hit a two-year high, adding pressure on the Bank of Japan to raise rates… but probably not until December.
For investors, dovish central banks mean cheaper money and (potentially) higher asset prices.
The U.S. dollar rose 0.5% this week, thanks to safe-haven demand amid global uncertainty. But zoom out, and the greenback is still on a downward slide. Analysts believe the dollar could weaken further, especially if geopolitical risks calm down and other economies begin to recover.
Asia sent mixed signals. Stocks dipped in Japan & Australia, but rose modestly in China.
In South Korea, KOSPI jumped 1.1%, topping 3,000 for the first time since 2022.
The reason for this is that South Korea’s new president, Lee Jae Myung, announced a stimulus package that investors are loving.
Data points like Germany’s PPI (Producer Price Index) for May, UK Retail Sales Data for May, and the ECB Economic Bulletin are very important to watch.
Markets might be calmer today, but the geopolitical and economic tightrope walk continues. Trump’s two-week pause gives the world time to talk, but not much room to breathe. Meanwhile, falling oil prices and friendlier central banks are helping investors find reasons to stay optimistic.
