General Market Analysis – 19/06/25

Stocks Consolidate After Fed Pause – Dow Down 0.1%

US stocks closed near flat yesterday after the Federal Reserve Bank kept interest rates on hold as expected. The Dow drifted 0.1% lower, the S&P lost just 0.03%, and the Nasdaq gained 0.13%. FX markets traded in relatively quiet ranges, the DXY closing up 0.01% at 98.88. US Treasury yields were also close to flat, the 2-year closing up 1 basis point at 3.941%, and the 10-year up just 0.2 of a basis point at 4.391%. Oil contracts consolidated as traders awaited the next update from the Middle East conflict, Brent down 0.13% at $76.33 a barrel and WTI up 0.40% at $75.14. Gold drifted lower as haven flows pulled back, down 0.81% by the NY close at $3,362.19 an ounce.

Markets Poised for More Geopolitical Volatility

Global markets took a bit of a breather yesterday as investors assessed the latest updates from the Middle East and analysed the Federal Reserve’s rate hold. Volatility pulled back yesterday as traders adapted to updates on news wires on the Middle East conflict. Whereas a few days ago, news of a missile attack would have seen a flight to safety across markets, now it barely registers on most products. Now, market participants are looking for more clarity on the way forward, and most do expect to have some sort of a solid update in the coming trading session. Oil has consolidated at levels around 8% higher than where they were before Friday’s initial attack, gold has pulled back to starting levels, and the dollar is 1% higher. However, traders feel that we will see volatility jump again on all these products with news in the coming sessions, with a further escalation seeing oil, gold, and the greenback breaking higher, whilst signs of a ceasefire will see them drop back into recent ranges.

Central Banks in Focus Again Today

Global financial markets will again be focusing on central bank updates today after the Federal Reserve Bank kept rates on hold as expected yesterday. The Asian session has a strong antipodean focus today. New Zealand GDP data has already been released early in the session, with the quarterly number coming in slightly better (0.9% vs 0.8%) than expected. But investor focus will swiftly jump the Tasman for Australian employment data (exp. +20.6K) and the unemployment rate (exp. 4.1%) in the next couple of hours. The European shift sees two major central bank rate announcements today, with the Swiss National Bank expected to cut by 25 basis points and the Bank of England expected to keep rates on hold at 4.25%. US markets are on holiday today, and traders are wary that the thinner liquidity conditions may lead to choppy trading conditions, especially if geopolitical concerns increase in the Middle East.

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