Market Report 25th June

Trade Tensions Loom Despite Market Resilience

Markets have repriced geopolitical risks lower, following a fragile but persistent ceasefire between Israel and Iran. With the risk premium fading, oil has stabilised and equity markets have rallied close to their year-to-date highs. However, the focus is now shifting to a broader structural issue: trade tensions.

The United States faces a significant turning point on July 9, when the current 90-day pause on additional tariffs expires for multiple trading partners:

India is seeking exemptions from the suspended 26 percent tariffs and negotiating concessions for agriculture, textiles, and gems.
China and the U.S. reached a preliminary agreement in June to make reduced tariffs permanent, cutting rates from 145 percent to 30 Final approval is still pending.
Japan remains at risk of unilateral S. tariffs unless it finalizes a deal in time.
The European Union is facing the threat of a 50 percent tariff on key exports, with

€95 billion in retaliatory duties already prepared.

Canada, like others, risks reinstated tariffs if no agreement is
The United Kingdom has already signed a trade agreement, with phased implementation

While many believe the Trump administration will hold tariffs at 10 percent rather than escalate further, the chance of a breakdown cannot be ignored. Analysts describe the environment as a “boiling frog” scenario, where high tariffs are no longer seen as shocking but have become an accepted feature of the landscape. Core goods inflation is ticking slightly higher but remains contained.

Bond markets are positioning for a dovish pivot. Traders expect U.S. 10-year yields to drift toward 4 percent. Fed officials, including Jerome Powell and Jeff Schmid, continue to signal a cautious approach, waiting for more data before moving on interest rates.

Oil Holds Steady, But Iran Tensions Still Simmer

Crude has recovered modestly after a sharp drop. The ceasefire has eased fears over Gulf disruptions, and a larger-than-expected U.S. inventory draw has supported near- term prices.

However, uncertainty around Iran lingers. The IAEA reports significant damage to Iran’s nuclear program, but the full extent is unknown. Iran appears committed to nuclear capability, more through continued activity than formal declaration. Further U.S. action remains possible if Tehran resumes progress.

OPEC meets July 6 to set August quotas. Another supply hike is likely, though actual output has consistently fallen short. Trump’s comment that China can buy Iranian crude has raised questions about enforcement, with markets watching for a stealth increase in Iranian exports.

Copper fundamentals remain tight, but the bigger story is the shift in global stock ﬂows.

LME copper stocks are down 65 percent this year, now just 94,675 tons. Available tonnage has fallen to a two-year low.
The decline is not due to It reﬂects a massive redistribution, as metal is diverted to the U.S. to capture the CME premium on customs-cleared copper.
S. copper imports surged to over 200,000 tons in April, the highest monthly rate in a decade.
CME stocks have doubled this year to 184,464 tons, the highest since
The ﬂow is being driven by Trump’s Section 232 investigation into copper imports, which has triggered a physical arbitrage trade.

Meanwhile, pricing remains volatile:

The LME cash-to-3-month spread hit $379 per ton, one of the steepest backwardations on record.
Chinese smelters are delivering over 30,000 tons to LME warehouses to unwind hedges, avoiding the costly roll.
This squeeze reﬂects stress on a system where domestic sales are priced to the SHFE, while hedges are on the LME.

ICSG data shows a 38,000 ton deﬁcit in April, reversing a March surplus. Year-to-date, the market remains in modest surplus, but bonded warehouse adjustments suggest deﬁcits are building. The physical market remains tight even as inventories migrate.

Iron ore is trading just above year-to-date lows as seaborne supply improves and Chinese steel output softens. Futures are down 8 percent this year and on track for a ﬁfth monthly loss.

Precious Metals: Gold Softens as Risk Premium Fades

Gold remains under pressure as ceaseﬁre stability dampens safe-haven demand. Real yields are high and inﬂation stable, limiting upside. The metal remains more reactive to bond markets than to geopolitics for now.

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