Inflationary pressure is easing in Canada and Australia. Oil fell to $65 per barrel amid a ceasefire between Iran and Israel

At the end of Tuesday, the Dow Jones Index (US30) rose by 1.19%. The S&P500 Index (US500) added 1.11%. The Nasdaq (US100) technology index closed 1.53% higher. On Tuesday, Wall Street ended trading with significant growth, helped by easing geopolitical tensions and the continuing fall in oil prices. Investor optimism increased as the US-brokered truce between Israel and Iran appears to be holding despite minor flare-ups. Semiconductor stocks led the gains in the technology sector, with Nvidia (+2.6%), Broadcom (+3.9%), and AMD (+6.8%) among the leaders. On the political front, Fed Chairman Jerome Powell’s testimony to Congress was cautious, indicating that the central bank is in no hurry to adjust interest rates but remains open to lowering them if conditions require it.

Canada’s annual inflation rate in May 2025 was 1.7%, unchanged from the previous month and in line with market expectations. Inflation remains below the Bank of Canada’s 2% target for the second consecutive month, holding steady compared to the previous month following the repeal of the federal carbon tax. Meanwhile, the median and trimmed mean core rate, which the central bank closely monitors, fell to 3% from 3.1% in the previous month, in line with expectations. Such data increases the likelihood of further rate cuts by the Bank of Canada.

European stock markets were mostly up on Tuesday. Germany’s DAX (DE40) rose by 1.53%, France’s CAC 40 (FR40) closed up 1.04%, the Spanish IBEX35 (ES35) added 1.41%, and the British FTSE 100 (UK100) closed 0.01% yesterday. The Frankfurt DAX index closed 1.6% higher on Tuesday, its highest level since June 16, as investors welcomed strong budget spending plans, positive economic data, and signs of easing tensions in the Middle East. The German cabinet approved draft budgets with investments of €115.7 billion for 2025 and €123.6 billion for 2026, compared to €74.5 billion in 2024, aimed at stimulating growth. The government also announced plans to increase defense spending to 3.5% of GDP by 2029 ahead of a key NATO summit on defense spending.

WTI oil prices fell more than 6% to $64.5 per barrel, extending the 7.5% loss in the previous session and trading below the levels seen on June 12, when Israel attacked Iran. The ceasefire eased concerns about possible disruptions to oil supplies and the closure of the Strait of Hormuz, through which more than a fifth of the world’s daily oil supplies pass. Meanwhile, the International Energy Agency has previously assured markets that it has 1.2 billion barrels in emergency reserves that can be tapped if necessary. In addition, some OPEC+ producers are already increasing production and have additional spare capacity that can be brought online.

Asian markets rose steadily yesterday. Japan’s Nikkei 225 (JP225) rose by 1.14%, China’s FTSE China A50 (CHA50) added 1.12%, Hong Kong’s Hang Seng (HK50) jumped 2.06%, and Australia’s ASX 200 (AU200) showed a positive result of 0.95%.

The Australian dollar strengthened to $0.650 on Wednesday, showing its third consecutive increase despite softer-than-expected inflation data. The core consumer price index rose 2.1% year-on-year in May, below market forecasts of 2.3% compared to 2.4% for the previous three months. Core inflation also slowed to 2.4% from 2.8%, the lowest since November 2021. Combined with recent weaker-than-expected GDP data, these figures have reinforced expectations of a 25-basis-point RBA rate cut in July, with markets now pricing in an 89% probability of this happening and a total rate cut of 73 basis points by the end of the year.

The International Monetary Fund (IMF) expects Vietnam’s economic growth to slow to 5.4% this year from 7.09% last year under a high tariff scenario. The country has held several rounds of negotiations with the US to reach a deal and avoid the 46% tariff on its exports proposed by the Trump administration. Last year, exports to the United States accounted for approximately 30% of Vietnam’s GDP.