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The Morning Edge: Gulf Selloff Deepens, Safe-Haven Assets Rise Amid Israel-Iran Escalation

A newsletter designed to prepare you for the day, offering a concise summary of overnight developments and key events ahead that could influence your workday.

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By Richard Fargose

June 16, 2025 at 1:17 AM IST

QUICK SNAPSHOT
Global Sentiment: Risk-off
Factors: Israel-Iran Conflict

TODAY’S WATCHLIST
- India May Trade data
- OPEC Monthly Report

THE BIG STORY
Stock markets across the Gulf plunged on Sunday as fears of a broader Middle East conflict rattled investors following a fresh wave of Israeli strikes on Iran. Tel Aviv confirmed it had targeted Iran’s nuclear facilities, ballistic missile factories, and top military commanders since Friday in what it signalled could be a prolonged campaign aimed at halting Tehran’s nuclear ambitions.

The fallout extended beyond the region, fuelling a global flight to safety. Oil prices surged, gold rallied, and equities dipped as investors assessed the growing risks. With Israel appearing to strike Iran’s oil and gas infrastructure for the first time—sparking a blaze at a gas field—Tehran responded by calling off nuclear talks with Washington. Meanwhile, US domestic tensions added another layer of volatility, with anti-Trump protests across the country stoking fears of political instability at home just as geopolitical stress abroad intensifies. 

DATA
US consumer sentiment surged to 60.5 in June, up from 52.2 in May, marking the first improvement in six months, according to the University of Michigan's preliminary reading. The rebound exceeded expectations of 53.5, likely supported by easing US-China trade tensions. However, confidence remains about 20% below its December level, reflecting persistent concerns about the economic outlook. The boost was dampened by geopolitical shocks, notably Israel’s missile strikes on Iran, which lifted oil prices and rattled markets. Separately, German inflation slowed to 2.1% in May from 2.2% in April, supporting the disinflation narrative across the eurozone. 

WHAT HAPPENED OVERNIGHT
US stocks tumbled on Friday as geopolitical tensions spiked after Iran launched missiles at Israel, escalating Middle East conflict risks. Explosions were reported over Tel Aviv and Jerusalem following Iran’s retaliation to Israeli strikes targeting Tehran’s nuclear capabilities. Airline stocks sank on concerns over rising fuel costs, with Delta, United, and American Airlines falling between 3.8% and 4.9%. In contrast, energy and defence stocks rallied. Exxon gained 2.2%, Diamondback Energy jumped 3.7%, while Lockheed Martin, RTX, and Northrop Grumman each rose more than 3% as investors rotated into defence-related assets.

The 10-year US Treasury yields climbed 5.6 basis points to 4.413% on Friday, rebounding from a one-month low of 4.31% earlier in the session as investors digested intensifying geopolitical risks. While the US distanced itself from the attack, market anxiety remained elevated. Despite the turmoil, a $22 billion sale of 30-year Treasuries drew solid demand, helping to steady the bond market. 

The US dollar slid rose on Friday as investors sought safe-haven assets following a sharp escalation in Middle East tensions after Israel launched strikes on Iranian nuclear and military sites. In response, Iran reportedly fired hundreds of ballistic missiles, fuelling global market volatility. The dollar index climbed 0.5% to 98.2, snapping a two-day losing streak. The greenback gained 0.3% to 143.88 against the yen and 0.1% to 0.8110 against the Swiss franc, reversing earlier weakness against traditional safe-haven currencies.

Brent crude oil prices surged 7% on Friday as escalating military strikes between Israel and Iran stoked fears of broader supply disruptions from the Middle East. Brent crude settled at $74.23 a barrel, up $4.87 or 7.02%, after briefly spiking over 13% intraday to $78.50—the highest level since January 27. The weekly gain of 12.5% reflects growing geopolitical risk premiums as markets brace for potential fallout in global oil flows from the region’s deepening conflict.

Day’s Ledger

Economic Data

  • China May industrial production data
  • India May WPI inflation data
  • India May trade data
  • US NY Empire State Manufacturing index

Corporate Actions

  • Earnings: Vipul, Belrise Industries, Ram Ratna Wires
  • Tanla Platforms to consider share buyback
  • Zee Entertainment Enterprises to consider fund raising

Policy Events

  • OPEC Monthly Report
  • German Buba President Nagel Speaks

TICKERS

  • BIRLA CORPORATION declared preferred bidder for Gourum Khan Ki Dhani (South) limestone block in Rajasthan.
  • ITC completed 100% acquisition of Sresta Natural Bioproducts for ₹4 billion. 
  • NAZARA TECHNOLOGIES informed that Rekha Jhunjhunwala sold over 3% stake via bulk deals on June 13. 
  • NTPC began commercial operations of Unit-3 (660 MW) at North Karanpura Super Thermal Power Project on June 15.
  • SPICEJET reported highest-ever quarterly profit of ₹3.19 billion in January-March. 2024-25 net profit stood at ₹480 million, first annual profit since FY18. Load factor was 88.1%. Promoters infused ₹5 billion equity.
  • SUN PHARMA informed that US FDA inspected the Halol facility from June 2–13. It ended with a Form 483 carrying eight observations. The site remains under import alert since a 2022 warning. Halol is among SUN PHARMA’s largest manufacturing units.
  • SYNGENE INTERNATIONAL received Establishment Inspection Report  from US FDA post inspection at its GMP facilities in Biocon Park, Bengaluru. 
  • VEDANTA to hold a board meeting on June 18 to consider an interim dividend for 2025-26. 

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