Oil prices fell sharply after Iran’s attack in the Middle East. Inflation in Malaysia continues to decline

At the end of Monday, the Dow Jones Index (US30) rose by 0.89%. The S&P 500 Index (US500) added 0.96%. The Nasdaq (US100) Tech Index closed up 0.94%. The US stocks closed higher on Monday amid falling oil prices after Iran launched missiles at a US air base in Qatar in response to US strikes on its nuclear facilities. The retaliatory measures were seen as restrained, as Iran refrained from striking key energy infrastructure or disrupting the Strait of Hormuz. President Trump also contributed by writing on social media that oil producers should “keep prices low,” which put additional pressure on oil. On the corporate front, Tesla rose by 8.2% after debuting its first driverless taxis, while AMD rose by 1% after a rating upgrade, helping to lift the broader technology sector.

The Canadian dollar fell to a three-week low against its US counterpart on Monday as investors weighed events in the Middle East and awaited domestic inflation data that could provide clues about the Bank of Canada’s policy outlook. Canada’s Consumer Price Index for May is expected to remain unchanged at 1.7% year-on-year. The focus will be on two key inflation indicators, which exceeded 3% in April. Softer data would reinforce expectations that the Bank of Canada, which refrained from action this month, may resume easing policy later in the summer.

European stock markets were mostly down on Monday. Germany’s DAX (DE40) fell by 0.35%, France’s CAC 40 (FR40) closed down 0.69%, the Spanish IBEX35 (ES35) Index lost 0.08%, and the British FTSE 100 (UK100) closed down 0.19%. On the data front, the flash PMI survey showed that Germany’s private sector returned to positive territory in June, marking the first increase since April.

WTI oil prices fell to $62.2 per barrel after Iran’s missile strike on a US airbase in Qatar did not result in casualties, easing fears of an immediate escalation of tensions in the Middle East. The attack, launched in response to US strikes on Iranian nuclear facilities, was intercepted by Qatari defenses. Although markets are now assessing the potential for de-escalation, significant risks remain — chief among them is the threat that Iran will attempt to close the Strait of Hormuz, through which about 20% of the world’s oil flows. Although Iran’s parliament has reportedly supported this move, the final decision rests with the country’s national security council. US officials, including Secretary of State Marco Rubio, have warned that such a move would be “economic suicide” for Iran and have called on China, its largest oil customer, to intervene.

Asian markets traded without a single trend yesterday. Japan’s Nikkei 225 (JP225) fell by 0.13%, China’s FTSE China A50 (CHA50) rose by 0.32%, Hong Kong’s Hang Seng (HK50) added 0.67%, and Australia’s ASX 200 (AU200) showed a negative result of 0.36%.

The Australian dollar strengthened to $0.648 on Tuesday, continuing its growth compared to the previous session, supported by the declining US dollar amid ambiguous developments related to the ceasefire between Israel and Iran. US President Donald Trump announced a “complete and definitive” ceasefire. However, Iran’s foreign minister denies that there is any agreement on a ceasefire or a halt to military action. In Australia, investors are now focused on the May monthly CPI figure, which is expected to decline slightly after remaining unchanged for three consecutive months. Markets currently estimate the probability of an RBA rate cut of 25 basis points in July at 80%, with a total rate cut of 73 basis points expected by the end of the year.

Malaysia’s annual inflation rate in May 2025 was 1.2%, lower than the previous two months and the market consensus expectations of 1.4%. This was the lowest reading since February 2021. Core consumer prices, excluding volatile fresh food and administrative costs, rose 1.8% year-on-year after rising 2.0% in April, the sharpest pace since November 2023.