Financial Markets 24/06/2025
The complicated situation in the Middle East (Israel-Iran-USA) has not been reflected in the financial markets for the time being. However, it is true that the price of oil has risen by more than 25% from its annual lows, while the rest of the assets show a less worrying tone for investors. In any case, if there is a more widespread increase in military activity in the area, the distribution of crude oil could be significantly affected, since around 25% of the world’s crude oil production and its by-products pass through the Strait of Hormuz. As far as production is concerned, the 4.5 M/b/d extracted by Iran is clearly below the 7.5 M/b/d that OPEC+ members currently have idle, and we must also take into account that with prices of 80 USD/b, it is very likely that new wells in the United States would join active production, as they would already be profitable. In other words, there is enough oil to meet current global demand, but changes in transport routes, higher insurance costs, etc., would lead to higher prices for the raw material, as well as delays in delivery times.
The military action in Iran has been going on for more than 10 days and does not appear to be coming to an immediate end, but neither does it seem likely to spread to the rest of the region, which has allowed managers to remain calm as the week closed with slight declines on the main stock markets, but with the US indices less than 3% from their all-time highs. The S&P 500 fell -0.15% compared to -0.02% for the Nasdaq 100. In Europe (remember that it has risen significantly over the year), the corrections were somewhat greater, -1.03% for the Euro Stoxx 50 and -0.47% for the Ibex 35.
Fixed income markets experienced some volatility throughout the week, first awaiting the Fed’s decision (it kept interest rates unchanged) and then analysing the comments of all the members of the Fed, some of whom left open the possibility of seeing a first rate cut in 2025 at the next meeting in July. In any case, the market continues to discount two 25 bps rate cuts that would occur in the last months of the year, once the real impact of the tariffs on inflation and US economic growth is known. The 10-year Treasury yield fell by 3 bps, the Bund by 2 bps and the Bond by 6 bps, possibly affected by the circumstances in which the government is immersed after the cases of institutional corruption that are being investigated.
The aforementioned calm was reflected in recent sessions as precious metals prices corrected from near all-time highs. At the close, gold fell to 3,385.70 USD/Onz, which represents a weekly drop of 1.94%.
On the macroeconomic front, China’s industrial production grew by +6.3% in May and the unemployment rate corrected to 5%. In Europe, the ZEW investment confidence index showed again the optimism about the European economy at 35.3 points against the previous estimate of 23.5 or 11.6. Moreover, the CPI again showed signs of being under control at 1.9% (2.3% the underlying figure), but watch out for developments over the coming months after the more than considerable rebound in oil prices seen in the last few days. Meanwhile, in the United States, retail sales corrected more than analysts’ estimates and fell by 0.9% in May, a figure that should be closely monitored as it gives a direct view of the impact of tariffs on US consumption.
Quote of the week:
And we leave with the following quote from Erich Fromm, the prominent psychoanalyst, social psychologist and humanist philosopher: ‘Human solidarity is the necessary condition for the development of any individual’.
Summary of the performance of the main financial assets (23/6/2025)
This report does not provide personalized financial advice. It has been prepared irrespective of the particular circumstances and financial objectives of the persons receiving it.
This document has been prepared by Portocolom Agencia de Valores S.A. for the purpose of providing general information at the date of issue of the report and is subject to change without notice. Portocolom Agencia de Valores S.A. assumes no obligation to communicate such changes or to update the contents of this document. Neither this document nor its contents constitute an offer, invitation or solicitation to purchase or subscribe for securities or other instruments or to make or cancel investments, nor may they form the basis of any contract, commitment or decision of any kind.
The information contained herein has been obtained from public sources believed to be reliable, and while reasonable care has been taken to ensure that the information contained herein is neither uncertain nor unequivocal at the time of publication, we do not represent that it is accurate and complete and it should not be relied upon as if it were. Portocolom Agencia de Valores S.A. assumes no responsibility for any loss, direct or indirect, that may result from the use of the information provided in this report. Past performance of variables may not be a good indicator of future performance.