Global markets find relief as Trump postpones Iran military action​

​​​Oil prices retreat from recent highs

Brent crude oil fell 2.1% to $77.23 per barrel on Friday as immediate fears of US military intervention in the Middle East subsided. The decline came after President Trump announced he would delay any decision on striking Iran for at least two weeks.

​Despite Friday's retreat, oil remains on track for a 4% weekly gain, marking the third consecutive week of increases. The previous week saw an almost 12% surge as tensions between Israel and Iran escalated dramatically.

​The temporary reprieve may create space for diplomatic negotiations, though underlying supply concerns persist. The situation remains fluid with both Israel and Iran exchanging missile strikes throughout the week-long conflict.

​Asian markets show mixed performance across regions

​The MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.7%, driven primarily by Hong Kong's Hang Seng index, which jumped 1.2%. However, the index remains down 0.4% for the week, reflecting ongoing uncertainty.

​South Korea's benchmark outperformed with a 1.1% rise, breaking above the psychologically important 3,000 level for the first time since early 2022. The surge followed newly elected President Lee Jae Myung's announcement of a stimulus spending plan.

​Japan's Nikkei 225 closed flat despite core inflation hitting a two-year high in May at 2.8%. The inflation data keeps pressure on the Bank of Japan (BoJ) to resume interest rate hikes, though investors don't expect action until December.

​China's markets showed resilience with modest gains, supported by the central bank's decision to keep benchmark lending rates unchanged as expected. The stability in Chinese monetary policy provided some reassurance to regional investors.

​US futures weaken despite holiday closure

​US equity markets were closed for the Juneteenth holiday, providing little direction for Asian trading sessions. However, futures contracts suggested a cautious tone, with both Nasdaq 100 and S&P 500 futures declining 0.2% during Asian hours.

​The subdued futures performance highlighted investor nervousness despite the temporary reprieve on Iran military action. Markets appeared to be taking a wait-and-see approach ahead of the resumption of full US trading.

​Central banks deliver dovish surprises globally

​Several central banks caught markets off guard with unexpectedly dovish moves overnight. Norway's central bank delivered its first rate cut since 2020, surprising analysts who expected rates to remain steady.

​The Swiss National Bank (SNB) reduced rates to zero and didn't rule out moving into negative territory if economic conditions deteriorate further. This marked a significant shift in policy stance as global growth concerns mount.

​The Bank of England (BoE) held rates steady but signalled potential for further easing measures. Governor Andrew Bailey indicated the central bank sees a need for additional monetary support as economic headwinds persist.

​Currency markets react to shifting sentiment

​The US dollar weakened against major peers as safe-haven demand eased following Trump's decision to delay military action. The euro gained 0.3% to $1.1527, while the pound rose 0.2% to $1.3494.

​Despite Friday's weakness, the greenback remains set for a 0.5% weekly gain driven by safe-haven flows during the height of Middle East tensions. However, many analysts expect the dollar's recent strength to fade if geopolitical risks continue to subside.

​The British pound's modest gains came despite the BoE's dovish commentary, suggesting traders are focusing more on global risk sentiment than domestic monetary policy. Sterling remains vulnerable to further weakness if global tensions escalate again.

​What this means for traders

​The temporary easing of geopolitical tensions provides a brief respite for markets, but underlying risks remain elevated. Traders should prepare for continued volatility as the situation in the Middle East remains unresolved.

​The two-week timeline announced by Trump mirrors his approach to other major decisions, including trade negotiations. This pattern suggests markets may see periodic relief rallies followed by renewed tension as deadlines approach.

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