Weekly recap
What happened in markets
The Australian sharemarket edged higher last week (+0.1%), led by the Financials sector advancing +1.8%. Major banks delivered strong results, with Macquarie (+5.4%) and ANZ (+2.9%) among top performers. Commonwealth Bank (+1.6%) reached a new record high, supported by solid passive inflows and improved earnings forecasts. Miners also rallied as iron ore futures rose +1.4% on signs of improved Chinese steel demand and falling port inventories. Cooler-than-expected May inflation data reinforced expectations for a July RBA rate cut. Meanwhile, insurers underperformed, with IAG (-1.7%) among the weakest in the sector.
US sharemarkets rose this week, with the S&P 500 (+4.4%) closing at a fresh record high. Technology and Communication Services led the market, up +4.7% and +6.2% respectively, driven by strong gains in Nvidia (+9.7%) and Meta (+7.5%). Other outperforming sectors included Consumer Discretionary (+4.4%), Banks (+3.4%), and Materials (+2.3%). Oil prices dropped over 11%, reversing recent gains as easing Middle East tensions and Iran-Israel ceasefire reduced geopolitical risks. Trade optimism improved after US-China and EU talks, though US-Canada tensions and tariff threats lingered. Treasury yields fell sharply, with the 2-year bond down to 3.8%, while the US Dollar dropped -1.5% to its lowest level since March 2022. Fed officials showed divided views, with markets now pricing in more rate cuts amid mixed economic data.
European sharemarkets rebounded last week, with the STOXX 600 rising 1.3% as geopolitical tensions eased and optimism around trade talks improved investor sentiment. A ceasefire between Israel and Iran helped drive oil prices lower from recent highs, demonstrating widespread relief and easing inflation concerns. The Construction & Materials sector led gains, climbing +4.6% on the back of positive corporate news and infrastructure-related momentum. Travel & Leisure (+4.4%) also rallied as lower fuel costs lifted profit outlooks for airlines and tourism operators. The Autos & Parts (+4.5%) and Technology (+3.1%) sectors were buoyed by easing trade tensions and renewed enthusiasm around AI.
Stock & sector movements
What caught our eye
Navigating Geopolitical Tensions: What Investors Can Learn from the June Middle East Crisis
1. What Happened? A Timeline of Escalation and Resolution
In June 2025, a fragile ceasefire brokered by US President Donald Trump temporarily brought an end to a dangerous 12-day military conflict involving Iran, Israel, and the United States.
The escalation began with Israeli airstrikes on Iran's nuclear facilities at Fordow, Natanz, and Isfahan, backed days later by direct US bombing campaigns. In retaliation, Iran launched missiles at the Al Udeid US airbase in Qatar, but only after giving advance warning. The base was evacuated, and no casualties were reported, indicating Iran’s intent to symbolically retaliate while avoiding wider escalation.
Shortly after the Iranian strike, Trump declared a complete and total ceasefire, urging all parties to halt aggression. Despite early violations, including missile strikes on Beersheba that killed four Israelis just as the truce took effect, both Iran and Israel ultimately agreed to honour the deal. Trump’s intervention, supported by Qatar and senior US officials, led to a temporary halt in hostilities.
Meanwhile, the International Atomic Energy Agency is pushing to regain access to Iranian nuclear sites to assess the real damage and locate enriched uranium stockpiles, which went missing following the strikes.
2. Oil Prices: A Spike Then a Sigh of Relief
Oil markets initially reacted sharply. Brent crude surged on fears of a regional war, before collapsing once it was clear Iran’s retaliation was symbolic, and the ceasefire held. As shown below, prices briefly jumped past US$75 per barrel, only to fall back below pre-war levels:
By late June, Brent had dropped to around US$64–68 per barrel, below levels seen before the June 13 Israeli airstrikes. Traders interpreted the de-escalation as a sign that supply disruptions would be minimal and broad regional war had been averted.
However, analysts remain cautious. Should tensions flare again, especially involving the Strait of Hormuz, a critical chokepoint for global oil shipments, prices could spike to US$100 or more per barrel, potentially reducing global GDP and lifting headline inflation significantly over the next year.
3. Why Remaining Calm Matters for Investors
This episode is a textbook example of how geopolitical shocks often play out in markets:
Sharp knee-jerk reaction: Asset prices respond rapidly to the possibility of escalation.
Fast recovery: When the worst-case scenario is avoided (in this case, no deaths from US-Iran strikes and a quick ceasefire), markets revert just as quickly.
Investor lesson: Patience and discipline are critical. Acting on headlines rather than fundamentals can be costly.
Indeed, market strategists reaffirmed that history shows geopolitical events rarely derail momentum for long. The S&P 500 and Nasdaq both rose as the truce took hold, while oil-sensitive sectors stabilised.
Final Thought: Stick to the Plan
Geopolitical turmoil is unnerving, but as this episode proves, markets are often more resilient than headlines suggest. Short-term volatility should not distract investors from long-term strategy.
With global central banks ready to support growth if needed and oil markets showing signs of stability, diversified portfolios anchored in fundamentals remain well-positioned to weather future uncertainty.
The week ahead
In Australia, CoreLogic’s home value index will be released early in the week, with CBA economists expecting a 0.6% rise in home prices for June. Focus will then shift later in the week to consumer data, including May retail sales and household spending, with forecasts of a 0.5% increase in both.
Overseas, key economic data will be released across Europe and the US. Europe will focus on inflation, employment, and retail figures. In the US, markets await labour data, including non-farm payrolls and unemployment, with markets closing early Thursday and shut Friday for Independence Day.
Wade is the head of the Investment Services division at Cutcher & Neale and has over 10 years of industry experience in accounting and investment advisory roles.
Ryan is our Portfolio Manager, bringing over 15 years of experience in managing multi-asset investment portfolios with a specialisation in fundamental equity analysis.
