• Iran and Israel half exchanges of fire; Iran says ‘no problem’ talking with US
• SpaceX IPO is said to be well oversubscribed, orders close Wednesday
• Google and Nvidia consider Intel as backup chip manufacturer
• Tech stocks rebound after Friday sell-off; Apple unveils ‘Siri Ai’

Forex

USD was mixed after it printed a fresh cycle high in the European session as geopolitical tensions ramped up on Israel-Iran military action between the two sides. But previous swings highs from early and late 2025 around 100.35 proved resistance as more positive headlines about Israel halting strikes saw risk assets rally. The strong NFP data from Friday had seen an upside dollar breakout, as markets pondered the end of the “no hire, no fire” stalemate that inspired Fed caution at the end of last year. There’s now around 28bps of rate hikes priced in for 2026, as markets turn to this week’s CPI figures to confirm elevated price pressures of 4% on the headline and near 3% on the core. This might further reinforce hike bets and potentially more support for the greenback.

EUR dipped to fresh lows just below 1.15 before paring losses on the slightly improved geopolitical headlines and risk mood. A 25bps ECB rate hike is baked into prices so what happens next and guidance from the fresh quarterly staff projections and President Lagarde’s press conference will be key. Optionality with a hawkish tilt seems to be consensus, still with a data dependent stance.

GBP lagged most its peers as cable slid close to the mid-May bottom at 1.3302 before rebounding. Friday’s release of inflation expectations data amongst the corporate community should give the BoE some confidence that second-round inflation effects are less likely. Otherwise, we only have Fridays’ GDP release ahead of next week’s MPC meeting. No rate changes are expected, with spread differentials moving away from EUR and USD as policy tightening gets and stays marginally tighter.

JPY weakened modestly as the major ground higher and into intervention zone territory, as we near next Tuesday’s BoJ meeting. A 25bp rate hike is generally expected and almost fully priced, leaving little in terms of near-term upside. For the major, focus is on the 160 level as a major psychological area for official currency management a.k.a. intervention. The chart offers little in terms of support between current levels and the 156/158 area.

Stocks

US stocks: The S&P 500 added 0.3% to close at 7,406, the Nasdaq closed up 1.58% at 29,414 and the Dow Jones settled lower by 0.16% at 50,791. Market breadth was weak, with only three sectors higher and Technology accounting for most of the upside. Utilities and Real Estate led the declines after outperforming during last week’s risk-off trade. The semiconductor SOX index bounced back after Friday’s big sell-off. Intel shares jumped 11.1% after reports Alphabet had tapped the company to make three million in-house chips, while Nvidia was evaluating their technology. Marvell jumped 9.6% after a hugely volatile week and as it was set to join the benchmark S&P 500 on June 22. Eli Lilly rose more than 1.5% as results showed its next obesity drug curbed sleep apnea as well as helping knee pain.

Asian Stocks: Futures are mixed. APAC stocks red on Middle East military strikes and the tech sell-off on Wall Street after NFP. The Kospi plunged more than 8% as its two big tech stocks, Samsung and SK Hynix, which have combined around a 40% weighting in the index, sold off.  The Nikkei 225 slumped over 3,000 points intraday and below 64,000 at one point on higher oil and poor tech sentiment. The Shanghai Composite and Hang Seng were lower on weakness in tech and mining.

Gold

Gold dipped to fresh cycle lows at $4,268 before paring losses on the improved risk mood. Prices had broken down through the long-term support at the 200-day SMA at $4,407 on Friday.

Day Ahead

Friday’s good news about the US job market was bad news for markets and stocks, or was it? Sure, indices saw strong selling after the release of blockbuster, goldilocks data with strong job gains and soft wage growth. The usual three sectors of leisure & hospitality, government, and private education and healthcare services have now accounted for every single one of the jobs added since December 2022. All other sectors like manufacturing, technology, energy, retail, and financial services have lost jobs on balance over the past three and a bit years. We suppose it doesn’t matter until it does, but those other sectors are normally the growth drivers of an economy.

However, the real likely reason for the big stock sell-off, and subsequent rebound is that global tech, the largest sector in the world, had risen around 50% in just about two months. After that kind of move, setbacks like Friday’s are entirely normal, as we have been hinting. In strong bull markets, sharp selloffs happen, while in the strongest bear markets, we also get days with very powerful rallies. That is exactly the kind of environment evident now and we should expect this to happen again. As we said on Friday, semiconductors had become more than 18% of the S&P 500 index, where typically they weigh in around 4%.

Chart of the Day – Gold false breakdown?

We wrote last week about the chance of a breakdown in bullion.  Price action looked vulnerable following the break of the $4,500 mark and the move out of the major long-term triangle. Sideways trading also warned of a range expansion which happens after small range days and tight, contracting price action.

The 200-day SMA, now at $4,407 was subsequently breached, an indicator that has not been pierced since November 2023 and supported prices on the March spike low. The descending triangle offers a measured move target of roughly $800 lower from current levels.

Elevated inflation expectations linked to higher energy prices, and last week’s strong ISMs and NFP reduced the likelihood of rate cuts. All that said, a confirmed peace deal should potentially support buyers.