NATO countries agreed to increase defense spending. Oil prices stabilized at $65

At the end of Wednesday, the Dow Jones (US30) Index fell by 0.25%. The S&P 500 (US500) Index fell by 0.01%. The Nasdaq (US100) Technology Index closed higher by 0.31%. Wall Street closed on a mixed note on Wednesday, as investors weighed steady developments related to the ceasefire in the Middle East and digested the second day of Fed Chairman Jerome Powell’s testimony to Congress. Fed Chairman Jerome Powell struck a cautious tone, signaling that while the Fed may manage potential inflation due to tariffs, it is not yet ready to cut rates despite growing pressure from President Trump and some lawmakers. Meanwhile, housing data showed that new home sales fell to their lowest level since October 2024 amid rising mortgage rates. Technology stocks led the market: Nvidia rose by 4.3%, Alphabet added 2.3%, and AMD increased by 3.6%. Tesla shares fell 3.8% due to weak European sales, and FedEx fell by 3.3% after publishing disappointing earnings expectations.

The Mexican peso strengthened to 18.9 per dollar, approaching the ten-month high of 18.886 reached on June 12, thanks to easing tensions in the Middle East and encouraging domestic inflation dynamics, which support the case for an earlier-than-expected rate cut by the Bank of Mexico.

European stock markets were mostly lower on Wednesday. The German DAX (DE40) fell by 0.61%, the French CAC 40 (FR40) closed down 0.76%, the Spanish IBEX35 (ES35) fell 1.59%, and the British FTSE 100 (UK100) closed down 0.46%. European stocks closed lower on Wednesday as markets continued to assess the impact of geopolitical tensions in the Middle East on energy prices and the outlook for European debt amid promises to increase defense spending. European NATO countries agreed to increase defense spending to 5% of GDP by 2030 during a summit in The Hague.

WTI oil prices rose more than 1% above $65 a barrel on Wednesday after falling nearly 13% in the previous two sessions, the sharpest two-day decline since 2022. Markets remain focused on events in the Middle East, where the US-brokered truce between Iran and Israel appears to be holding. As a step toward strengthening the truce, President Trump also signaled support for China, Iran’s largest oil buyer, to continue importing Iranian oil, which appears to undermine years of US sanctions against Tehran.

The US natural gas prices (XNG/USD) fell more than 1.5% to below $3.50/MMBtu, the lowest in two weeks, under pressure from rising production and significant injections into storage facilities. In June, average production in the lower 48 states was 105.5 billion cubic feet per day, slightly higher than in May but still below March’s record high due to spring maintenance work. Despite hotter-than-usual weather last week, analysts expect gas injections into storage to be above average, with inventories remaining about 6% above the five-year average.

Asian markets rose steadily yesterday. Japan’s Nikkei 225 (JP225) rose by 0.39%, China’s FTSE China A50 (CHA50) rose by 1.26%, Hong Kong’s Hang Seng (HK50) added 1.23%, and Australia’s ASX 200 (AU200) showed a positive result of 0.04%.

In China, Beijing presented new recommendations to stimulate consumption through financial instruments aimed at supporting jobs, increasing incomes, and strengthening the economy as a whole. Premier Li Keqiang also expressed confidence in maintaining relatively rapid growth and transitioning to a consumer-oriented economy. On Thursday, the offshore yuan strengthened to above 7.15 per dollar, reaching its highest level since early November 2024. The People’s Bank of China (PBoC) is establishing a new center in Shanghai to promote the digital yuan and is launching initiatives to encourage its use in global trade and finance.

On Thursday, the New Zealand dollar strengthened to 0.605 US dollars, showing its fourth consecutive day of growth. This was facilitated by improved risk sentiment amid the continuing truce between Israel and Iran. In the domestic market, the latest economic data, in particular better-than-expected GDP figures for the first quarter and an increase in the trade surplus, reinforced the view that the Reserve Bank of New Zealand is nearing the end of its current easing cycle.