Movement of oil tankers in the Strait of Hormuz remains largely unchanged despite the US attack on Iran over the weekend and the treat of closing the channel, critical to the world’s energy supplies.
The Joint Maritime Information Centre which issues daily alerts to the shipping industry in the region based on naval information, said the threat level was “elevated” with “severe consequences for shipping” the the Iranian parliament’s threat to close the Strait is carried out.
In Monday afternoon’s alert it said there were “persistently higher levels of electronic interference” from the southern Iranian port of Bandar Abbas and in the Arabian Gulf which “seems to be excessively affected”.
It noted that 67 vessels travelled eastward on Sunday and 50 westward, higher than the June average of 114 vessels daily sailing through the Strait but consistent wth last Monday’s traffic of 65 vessels heading out of the Arabian Gulf and 53 vessels entering.
Closing post
Time to wrap up…
The financial markets have reacted pretty calmly to the US attacks on Iran’s nuclear facilities.
Although oil did spike by 5% when trading began today, that jump quickly unwound.
Indeed, crude oil prices are now down around 1% today, after US president Donald Trump called for cheaper prices, saying:
EVERYONE, KEEP OIL PRICES DOWN. I’M WATCHING! YOU’RE PLAYING RIGHT INTO THE HANDS OF THE ENEMY. DON’T DO IT!
Trump also stepped up his call for the US to increase its oil production, writing:
“To the Department of Energy: DRILL, BABY, DRILL!!!” And I mean NOW!!!”
Economists have warned that oil prices could jump if supplies from the gulf region were disruped. Goldman Sachs estimated that disruptions to shipping through the strait of Hormuz could push the price of Brent crude over $100 per barrel, up from $76 per barrel today.
Jim Reid of Deutsche Bank warned that maintaining the accessibility of the Strait of Hormuz is “pivotal to the global economic outlook”, explaining:
Despite being just 21 nautical miles wide at its broadest point, the strait handles a significant share of Middle Eastern oil exports. It features two narrow 2-mile-wide shipping lanes, separated by a 2-mile buffer zone.
The head of the International Monetary Fund warned that US strikes on Iran could damage global economic growth.
Director Kristalina Georgieva told Bloomberg TV that the IMF was watching energy prices closely, warning a rise in oil prices could have a ripple effect throughout the global economy.
She explained:
“There could be secondary and tertiary impacts. Let’s say there is more turbulence that goes into hitting growth prospects in large economies – then you have a trigger impact of downward revisions in prospects for global growth.”
Wall Street is up in morning trading, as investors in New York digest the latest developments in the Middle East.
The Dow Jones industrial average has gained 125 points, or 0.3%, to 42,331 points.
The broader S&P 500 index is up 0.5%, led by Tesla whose shares have surged 9% after it launched its robotaxi service in Austin, Texas.
The oil price has fallen, since president Trump issued his call for cheaper oil.
Brent crude is now down 1.1% today at $76.13 per barrel.
Fawad Razaqzada, market analyst at City Index, says “all eyes” are on how Tehran responds to the US bombing attack on its nuclear facilities, adding:
Thus far, Iran’s has not responded in a meaningful way, but that could shift at any moment. Should Iran escalate—whether through direct strikes on US assets, attacks by proxies like Hezbollah, or sabotage of oil infrastructure in the Gulf—the market will react swiftly.
The Strait of Hormuz is the wildcard. Roughly 20% of the world’s oil passes through this narrow choke point daily. Iran’s parliament has signalled its intent to close the strait in response to US actions, though the final decision rests with the national security council. A full blockade would hurt Iran as well, given its dependency on crude exports to Asia—but asymmetric attacks on ships or terminals remain a very real possibility.
The current price moves, then, are best seen as a risk premium. There’s been no disruption to supply—yet. But the market knows all too well how quickly that could change.
Elsewhere in the energy sector, the hot weather is hampering output at a nuclear power plant near Lyon.
High water temperatures on the Rhone river in eastern France are expected to affect electricity production at the 2.6 gigawatt (GW) Saint-Alban nuclear plant from 1 July, nuclear operator EDF said in a notice on Monday.
This is the second notice for high river temperatures after the Bugey nuclear plant was flagged last week, Reuters points out.
Nuclear stations use a large amount of water to cool their systems, which they return back to rivers, lakes or the sea afterwards. Problems occur when the water intake is too warm to cool the plant, and when the hot water being returned to the river or sea kills fish and other wildlife.
Donald Trump is also urging America’s energy department to encourage more oil and gas extraction across the US (a familiar Trump mantra).
He posts:
To The Department of Energy: DRILL, BABY, DRILL!!! And I mean NOW!!!
Trump: EVERYONE, KEEP OIL PRICES DOWN. I’M WATCHING!
Fresh from launching his bombing attack at Iran, president Donald Trump has urged ‘everyone’ to keep oil prices down.
Posting on his Truth Social site a moment ago, the US president says:
EVERYONE, KEEP OIL PRICES DOWN. I’M WATCHING! YOU’RE PLAYING RIGHT INTO THE HANDS OF THE ENEMY. DON’T DO IT!
At pixel time, oil prices are broadly flat today, with Brent crude up 0.2% at $77.17 per barrel.
Christine Lagarde also points out to MEPs that support for the euro has reached an all-time high, showing them a chart to prove it:
She tells the European Parliament:
Now is the time to make the euro area economy more productive, competitive and resilient. We need to see targeted fiscal and structural policies and strategic investments.
Lagarde also calls for a legislative framework to pave the way for the potential introduction of a digital euro to be put in place rapidly, adding:
By making the right policy choices, we can leverage the current momentum to boost the economic perspectives for Europe and its citizens.
Lagarde: Risks to the growth outlook remain tilted to the downside
Over in Brussels, the head of the European Central Bank is warning that geopolitical risks could hurt eurozone growth.
ECB president Christine Lagarde told the European Parliament’s Committee on Economic and Monetary Affairs that higher tariffs and a stronger euro are expected to dampen exports, with high uncertainty delaying investment decisions.
Lagarde says:
Risks to the growth outlook remain tilted to the downside, however. In particular, growth could slow in the event of a further escalation in global trade tensions and the associated uncertainties, deteriorating financial market sentiment and continued geopolitical tensions.
That being said, a swift resolution to trade and geopolitical tensions or a further increase in defence and infrastructure spending could spur activity by more than expected.
Lagarde also tells MEPs that the outlook for euro area inflation is more uncertain than usual; frictions in global trade present both upside and downside risks.
She says:
Upside risks include a possible fragmentation of global supply chains, while downside risks include lower demand for euro area exports and countries with overcapacity rerouting their exports to the euro area.
The Green Party have also criticised Reform’s new “Britannia Card”, calling it a wheeze to prop up the super wealthy.
They cite data suggesting that giving wealthy foreigners and returning British expats a bespoke tax regime in exchange for a one-off payment of £250,000 would cost tens of billions in lost tax.
Green Party co-leader Adrian Ramsay MP says:
“Nigel Farage’s latest wheeze to prop up the super wealthy, dressed up as helping the poorest, would result in an estimated loss of a whopping £34bn to the Treasury [1]. Rather than enabling the super-rich to buy their way out of paying UK tax, the Green Party would tax investment income as equivalent to earned income and introduce a wealth tax based on assets. This is the way to fix our public services to benefit everyone.
“This is another reminder that Reform UK is a Party run by multi-millionaires out to look after their own and with net zero interest in the rest of us. There’s nothing patriotic about a “Britannia card” that would let the ultra-wealthy avoid paying taxes and contributing to society.”
The £34bn figure was calculated by tax expert Dan Neidle, based on the revenue that would be lost from the current regime for non-doms.
The amounts involved are very large. The Office for Budget Responsibility's assessment of the recent Conservative and Labour non-dom reforms says they raise a net £33.9bn from 2026/27 to 2029/30 (most of which is from the Conservative March 2024 reforms): pic.twitter.com/OU0Ltst3yx
— Dan Neidle (@DanNeidle) June 23, 2025
UK promises £41m to improve train wifi
Detail of bigger commitments, such as Northern Powerhouse Rail, continue to be merely teased in today’s UK Industrial Strategy, but there are a couple of firm and specific pledges of interest to the railway.
First, an East Coast mainline at Tempsford, Bedfordshire - a village that is destined to become a major new town.
And secondly, an attempt to resolve that perennial trouble - train wifi. Two years after the Department for Transport was considering telling operators to simply give up on the substandard service, the government is now turning to space to solve the problem, spending £41m to introduce low-earth-orbit satellite connectivity on all mainline trains.
The government says it will “significantly improve both the availability and internet connection speeds for wi-fi connected passengers, in turn enabling a better-integrated transport network.”
Reeves roasts Farage over 'Britannia Card' proposal
Rachel Reeves has gleefully laid into Nigel Farage’s plan for a £250,000 flat-rate fee for wealthy foreigners - which some have compared to Donald Trump’s “golden visa”.
Reform’s “Britannia Card” would allow returning expats and rich new arrivals lower taxes, in return for the levy - promising to spend the proceeds on low-income workers.
However, the chancellor insisted the plan was “worse than a gimmick”.
“Basically, it’s a massive tax cut for foreign billionaires,” she said, speaking to reporters in Nuneaton as Labour launched its industrial strategy.
“It takes you back to a system that is even more generous than what the Tories had under Rishi Sunak. We tightened up the rules to bring in more than £33bn in tax revenue by ensuring that if people make Britain their home, they pay their taxes here, That’s what Labour’s ensuring.
She added:
“This opens up serious questions about what taxes will have to go up on working people and what public services, including the NHS, would have to be cut to afford a giveaway for foreign billionaires. If this is their first proper policy, then, you know, this is going to unravel pretty quickly.”
The chancellor was also challenged about Friday’s public finances data, which showed the deficit for May running ahead of the Office for Budget Responsibility’s projections, prompting predictions of tax rises in the autumn.
“That’s just one month’s worth of public finance data. It came in slightly higher than the OBR, but slightly lower than market expectations and obviously these numbers are all subject to revisions. So I wouldn’t read too much into one month’s data,” she said.
The majority of Iran’s oil exports are directed to China, with the remainder primarily going to other Asia-Pacific nations, new analysis from Deutsche Bank shows.
Their market strategist Jim Reid explains:
Most of these shipments pass through the Strait of Hormuz—a critical chokepoint for global energy markets. Despite being just 21 nautical miles wide at its broadest point, the strait handles a significant share of Middle Eastern oil exports. It features two narrow 2-mile-wide shipping lanes, separated by a 2-mile buffer zone.
Given these constraints, the continued accessibility of the Strait of Hormuz is pivotal to the global economic outlook—especially following U.S. involvement in the regional conflict over the weekend. As the chart suggests, China is likely to play a key role in influencing Iran’s strategic choices.
European gas prices have risen today, as traders assess the risks of supply disruption.
The benchmark Dutch front-month contract has gained 2% today to €41.50 per megawatt hour (MWh) this morning. That would be its highest closing level since the start of April.
Jess Ralston, head of energy at the Energy and Climate Intelligence Unit (ECIU) says:
“Oil and gas are commodities that are particularly vulnerable to price spikes as a result of conflicts and geopolitical events; this has always been the case and always will be.
The UK is particularly exposed to increases in gas prices as we are reliant on the fuel for around 30% of our power generation and 85% of our home heating, which resulted in us being the worst hit by the gas crisis in western Europe, according to the International Monetary Fund.
Three empty oil and chemical tankers have diverted away from the Strait of Hormuz and changed course, according to Marine Traffic ship tracking data reported by Reuters.
The Marie C and Red Ruby, which were in ballast rather than carrying cargo and previously sailing towards the Strait, dropped anchor near Fujairah off the United Arab Emirates coast.
The Kohzan Maru was sailing in the Gulf of Oman close to Omani waters, according to data on the MarineTraffic platform.
Three oil and chemical tankers diverted from Strait of Hormuz — MarineTraffic. pic.twitter.com/1F3rSZaApo
— Eagle Eye (@zarrar_11PK) June 23, 2025
Reeves: higher oil prices will impact UK economy
Chancellor Rachel Reeves has told reporters that the government is following developments in the Middle East very closely.
Asked about the potential impact on oil prices of closing shipping lanes that are crucial to global supplies, Reeves said:
“We want de-escalation because it’s the right thing for the Middle East, but we also want de-escalation because of the ramifications of conflict in the Middle East for the rest of the world including the UK.
“We have seen increases in oil prices in recent days and weeks, which of course will have an impact on the UK economy. We recognise the challenge that businesses and families face with energy costs.
“Of course, higher oil prices will have implications for the UK economy. One of the reasons we want de-escalation is to ensure that oil continues to flow and to ensure that that key route, both for oil and for wider trade – the Strait of Hormuz – continues to be open.”
At the end of May, before tensions between Israel and Iran soared, Brent crude was trading at $64/barrel, around 20% below its current levels.
Pound drops to one-month low
The pound is continuing to lose ground in the financial markets against the dollar.
Sterling has lost almost three-quarters of a cent today to $1.3380, its lowest since 21 May.
Potential geopolitical dangers, such as Iran’s threats to close the Strait of Hormuz, are providing support for the dollar.
George Vessey, lead FX & macro strategist at foreign exchange payments firm Convera, explains:
Over the weekend, President Trump launched airstrikes on three Iranian nuclear facilities — a move that not only bolstered Israel’s campaign to dismantle Iran’s nuclear program but also drew the U.S. further into the regional conflict. The decision surprised many. Trump had previously campaigned on an anti-interventionist platform, advocating against deeper U.S. entanglement in the Middle East. And as recently as late last week, he appeared willing to give diplomacy a two-week window before resorting to military action. That posture changed swiftly.
In the lead-up to the strikes, markets were pricing in diplomatic progress: the euro strengthened, the dollar softened, safe havens were muted, and oil dropped nearly 3% on Friday — signaling a partial return to the pre-conflict playbook. But the U.S. intervention has now reversed that momentum.
While the broader bias still leans toward structural dollar weakness, escalating Middle East tensions are injecting support for the greenback via the commodity channel. That channel will remain central in the days ahead, as Iran — according to state-run TV — has vowed to retaliate by closing the Strait of Hormuz, a critical artery through which about one-fifth of global oil flows. Although any such action would require approval from Supreme Leader Ayatollah Ali Khamenei, it would mark a first in the Islamic Republic’s nearly five-decade history. As such, even the threat alone is enough to keep the dollar bid, with positioning set to adjust as investors begin to unwind their bearish US dollar bets.
This map, from LSEG, shows just how busy the Strait of Hormuz is today.
It is 33km wide at its narrowest point, with the shipping lane just 3km wide.
Members of the Organization of the Petroleum Exporting Countries (OPEC) – Saudi Arabia, Iran, the United Arab Emirates, Kuwait and Iraq – export most of their crude via the strait, mainly to Asia.
Updated
Tim Gould, chief energy economist at the International Energy Agency, has said greater geopolitical uncertainty will be an “important driver” of change in the clean energy transition.
Speaking at the Net Zero Delivery Summit in London this morning, Gould said an uptick in clean energy spending had happened “in particular since Russia’s invasion of Ukraine in 2022” and also “with intensifying conflict in the Middle East”.
It has been “an important driver for the deployment of clean technologies”, he said, adding:
“That may sound a little bit counterintuitive because you sometimes hear the view that if you are interested in energy security you invest in fossil fuels, if you are interested in emissions reductions you invest in renewables. But the reality is significantly more complicated.”
While there are a range of motivators behind the decision to transition to clean energy, he said, “energy security” is an important reason to bring new technology into the system.
“That was a big theme that we picked up during a recent summit held jointly with the UK government on the future of energy security.
“Since 2022 we have seen a very rapid pick up in the pace of spending on energy transition and in today’s insecure, low trust world I think that preference for homegrown energy, particularly in fuel importing countries and regions, will continue to be an important driver of change.”
A report by the IEA earlier this month found that global energy investment is set to increase in 2025 to a record $3.3trn, with clean energy technologies attracting twice as much capital as fossil fuels.
Investment in clean technologies such as renewables, nuclear, grids, storage, low-emissions fuels, efficiency and electrification, is on course to hit a record $2.2trn this year, the IEA found. Investment in oil, natural gas and coal is on track to hit $1.1trn.
Goldman Sachs warns Brent crude could rise over $100 per barrel if Strait of Hormuz is disrupted
Although the oil price’s early spike last night didn’t last, economists predict energy prices would soar if there was significant disruption to supplies from the Middle East.
Goldman Sachs have predicted that disruptions to shipping through the Strait of Hormuz could push the price of Brent crude over $100 per barrel.
That would be its highest level since August 2022, and almost a third higher than its current level of $77/barrel, pushing up transport costs, lifting inflation and hurting growth.
Bloomberg explains:
If oil flows through the Strait of Hormuz were to drop by half for a month, and remained 10% lower for another 11, Brent would spike briefly to as much as $110 a barrel, analysts including Daan Struyven said in a note. Should Iranian supply fall by 1.75 million barrels a day, Brent would peak at $90.
However, Goldman’s baseline assumption is that that physical disruptions to Iran supply and regional oil and gas production and shipping are avoided; in that scenario, Brent crude falls to $60/barrel by the end of the year.
As we reported last night, Iran’s parliament has voted to shut down the vital Hormuz shipping channel in retaliation against Donald Trump’s attack on the country.
Goldman analysts argue that there are strong incentives to avoid disruption to the Strait of Hormuz, which carries a fifth of global oil. They say:
“The economic incentives, including for the US and China, to try to prevent a sustained and very large disruption of the Strait of Hormuz would be strong.”
Professor Costas Milas, of the Management School at the University of Liverpool, tells us:
Following Trump’s direct intervention in the Israel-Iran war, geopolitical risk is on the rise and oil prices are expected to stay higher than previously thought. What are the implications for the UK economy and UK interest rates?
The good news first: As I discussed in an LSE Business Review Blog (jointly with Michael Ellington from Liverpool University), the adverse impact of geopolitical risk and inflation on the UK economy has diminished over time.
The bad news next: Higher oil prices are expected to increase inflation for up to four quarters. The negative impact of inflation on UK growth will take up to three quarters to show up. Geopolitical risk is expected to depress output for two to three quarters. The BoE’s monetary policymakers will have to make a judgement on whether the negative impact on GDP growth outweighs the inflationary impact. If so, Bank Rate will be cut in early August, if not earlier (through an unscheduled meeting in July).
Updated
Industrial strategy criticises 'over-bearing and feeble' state
The UK’s industrial strategy also has a damning verdict on the role of the state, saying:
For too long Britain has had a state which, paradoxically, both stands back and interferes too much. When our industries were at the mercy of change, too many people and communities were left to fend for themselves, with government uninterested in providing a bridge to the future. Yet equally, when new opportunities present themselves, Britain often finds itself too regulated to take advantage, or too cautious to change course.
The result is a state that is both over-bearing and feeble, poorly serving an economy that has become too reliant on one place, too exposed to global volatility and too sluggish to take advantage of transitions.
UK launches 'modern industrial strategy'
The UK government is attracting praise, and criticism, after outlining its new industrial strategy to support the British economy.
Dubbed the ‘modern industrial strategy’, the plan (which you can read here) aims to increase business investment and grow the industries of the future.
It focuses on eight important sectors: advanced manufacturing, creative industries, life sciences, clean energy, defence, digital and technologies, professional and business services, and financial services.
The ‘growth mission’ breaks down into ten parts:
Tackling high industrial electricity costs, including slashing green levies on thousands of businesses to bring down bills, and investing in the electricity grid so companies can get ‘timely grid connections’
Promoting free and fair trade through strong international partnerships, including securing new and improved trading arrangements with a pragmatic, agile, smart and fair approach to navigating a fragmented, geopolitically volatile, and tech-driven world.
Strengthen the UK’s economic security through the uplift in defence spending
Expanding access to finance, by giving the British Business Bank additional capital and expanding the mandate of the National Wealth Fund
Driving innovation, underpinned by an £86bn investment into UK R&D
Treating UK data as an economic asset
Reforming the skills and employment support system to create a strong pipeline of skilled workers,
Reducing regulatory burdens and cutting the administrative costs of regulation for business by 25%.
Removing planning barriers, and fast-tracking decisions on critical projects in the planning system.
Ensuring the tax system supports growth and high-growth sectors
Ministers say they are offering investors political stability in this uncertain world, saying:
Business-as-usual will not work. We need a new relationship between business and government, where government provides the strategic certainty that allows businesses to do what they do best: create wealth. This requires a more muscular approach to government: one prepared to back British businesses, invest in our comparative advantage, and take punts in pursuit of growth and productivity.
And this government understands the importance of agility and enterprise; to relentlessly ask whether regulations are blocking the conditions for Britain to thrive.
Recruitment and Employment Confederation (REC) chief executive Neil Carberry is pleased that Professional and Business Services is one of the eight high-growth sectors identified.
Carberry says:
“Firms need stable foundations from the state to deliver business investment and productivity growth. That’s what will increase prosperity and tackle the shortfall in the public finances.
This Industrial Strategy is an important chance to finally make progress on this over the long term, forming a new partnership between business and government. The test now is whether the strategy can be delivered, not just by the Department for Business, but at the core of all government policy.
The hospitality sector, though, is disappointed to miss out on any new support.
Kate Nicholls, chief executive of UKHospitality, argues that the strategy ignores much of the economy:
“This is not an industrial strategy that will deliver growth equally across the UK. In fact, by ignoring 70% of the economy it is at odds with the Government’s ambition to create jobs and help people into work.
“Once again, growth will be distributed unevenly and centred around small industrial clusters that have high barriers to access – hardly a recipe for driving social mobility.
“We were desperate to see a plan for hospitality and the high street, which together employs over 7 million people. We were disappointed.
“How can national renewal be properly delivered if 70% of the economy is excluded from the Government’s flagship plan for growth?
Updated
Oil slips back from five-month highs
Oil has slipped back from its earlier highs, and is now slightly down this session.
Brent crude is now trading at $76.85 per barrel, down 0.25% today (it closed at $77.01/barrel on Friday night). Its early spike to $81.50 per barrel, a five-month high, has not lasted long.
AJ Bell investment director Russ Mould says:
“The markets are not yet reacting with any degree of panic to the US airstrike on Iran’s nuclear facilities as they await to see how Tehran responds.
The promised two-week hiatus as the US weighed its decision didn’t materialise as the Trump administration acted on Saturday. After briefly spiking above $80 per barrel when the market opened in Asia on Monday, Brent pared those gains to trade modestly higher.
UK company growth hits three-month high
Growth across UK businesses accelerated slightly this month, but remains weak.
The latest poll of purchasing managers at British companies shows that output picked up this month, as the private sector recovered from a drop in April.
The services sector expanded, while manufacturing shrank again.
Some companies reported a pick-up in order books, and client confidence, after the US rolled back its tariff announcements.
But, global trade tensions and “rising geopolitical uncertainty” were cited as headwinds to growth, particularly in manufacturing.
Overall, the flash UK PMI composite output interest rose to 50.7 this month, from 50.3 in May, showing the fastest growth in three months.
S&P Global, which produces the report, says it is consistent with economic growth of around 0.1% in the April-June period.
Chris Williamson, chief business economist at S&P Global Market Intelligence, says:
“The UK economy remained in a sluggish state at the end of the second quarter, according to the early PMI survey data.
“Although business conditions have continued to improve since April’s downturn, quelling recession fears, growth of business activity remains disappointingly lacklustre.”
Updated
Airlines are weighing up how long to suspend Middle East flights, after the conflict in the region entered a new phase with the US attacs on Iran, Reuters reports.
Leading Asian carrier Singapore Airlines, which described the situation as “fluid”, moved to cancel flights to Dubai through to Tuesday, having previously cancelled only its Sunday service.
IAG group member Iberia cancelled Sunday’s and Monday’s Doha flights after making its own assessment, a spokesperson said. It has not made a decision regarding later flights.
Air France KLM cancelled flights to and from Dubai and Riyadh on Sunday and Monday, and Finnair cancelled flights from Doha until at least Tuesday.
Kazakhstan’s Air Astana cancelled flights to Dubai on Monday.
More here: Airlines weigh Middle East cancellations after US strikes in Iran
Over at Heathrow, a BA flight to Dubai that was due to leave at 12.50pm today has been cancelled, as has a 1.45pm Doha flight (although a 9.25pm flight to Doha is still shown to be operating…)
Updated
Eurozone growth stalling in June
The eurozone economy has continued to flirt with stagnation this month, with little growth in its key sectors.
The latest survey of purchasing managers across the euro area, just released by S&P Global, shows that the eurozone services sector is stalling this month, while factory growth slowed.
Firms reported another drop in new orders but, more encouragingly, business confidence improved to the strongest since the start of 2025.
German business activity returned to growth in June, but French output fell further during the month.
This has left the HCOB flash eurozone composite PMI output index unchanged at 50.2 (any reading over 50 shows growth).
Dr. Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, says:
“The eurozone economy is struggling to gain momentum. For six months now, growth has been minimal, with activity in the service sector stagnating and manufacturing output rising only moderately.
In Germany, there are signs of a cautious improvement in the situation, but France continues to drag its feet. The momentum evident in the official growth figure of 0.6 percent for the first quarter is unlikely to have carried over into the second quarter, especially since special factors such as Ireland’s unusual jump in growth inflated this figure.
However, there is no reason to be resigned, as the outlook has brightened according to the survey and companies are keeping employment roughly constant.
Japan’s currency has weakened today, as traders suspect that higher oil prices would hurt its economy.
The yen has lost 0.8% against the US dollar, dropping to ¥147.24/$ from ¥146.07/$ on Friday night, extending its recent losses.
Lee Hardman, senior currency analyst at MUFG, explains:
Yen weakness could initially reflect investor concerns that Japan’s economy would be hit harder by higher oil prices given its reliance on energy imports from the region, and the potential for inflationary fears to lift yields more outside of Japan.
The flight to quality bid in response to US missile strikes on Iran has not been sufficient to reverse the yen weakening trend that has been in place recently which has been encouraged as well by BoJ caution over raising rates given elevated uncertainty related to trade policy and geopolitical risks in the Middle East.
European stock markets are also down in early trading.
France’s CAC has lost 0.65%, Spain’s IBEX is down 0.6%, and Germany’s DAX lost 0.55% at the open.
That’s a fairly muted reaction to the US bombing of Iran over the weekend.
Mohit Kumar of investment bank Jefferies says the markets are waiting to see how Iran reacts, adding:
Current market open suggests that base case is for a token response which will allow Iran to claim a counter-attack but with the aim of de-escalation.
Key would be whether Iran would (or could) close the strait of Hormuz and disrupt global oil supply. With US and Israel planes reported to have almost clear access to Iran’s airspace, the closure of the strait would be practically impossible.
Jefferies’ base case scenario is that we now enter a period of uncertainty lasting a few weeks, but without a sharp escalation.
Kumar cautions that Jefferies are not “fully convinced” by the market’s sanguine reaction, explaining:
We would advise using the limited reaction to reduce risk exposure in equities and credit. We are not geo-political experts. While we agree that Iran’s retaliatory capabilities may be significantly reduced, it could still use drones and smaller weapons to maintain a heightened level of uncertainty for some time.
We don’t see a closure of the Hormuz strait but see possibility of disruption. Any attacks on US interests in the Gulf region could also escalate tensions further.
FTSE 100 opens in the red
The UK stock market has dropped at the start of trading, as traders weigh up the situation in the Middle East.
Airline shares are down, with easyJet (-2.1%) and British Airways parent company IAG (-2.2%) leading the fallers on the FTSE 100 share index. Higher oil prices push up their costs, while the crisis could also lead to flight cancellations.
Update: Yesterday, BA cancelled flights from London to Dubai and Doha.
BP (+1.7%) and Shell (+1%) are leading the risers.
Overall, the FTSE 100 index is down 23 points or 0.26% at 8751 points, away from the record closing high set earlier this month.
Updated
Spectris agrees £3.8bn takeover offer...
The new week has also begun with some takeover excitement in the City of London.
Spectris, the UK-based maker of precision and testing equipment and software, has agreed to be bought by private equity firm Advent in a £3.8bn deal.
Spectris develops high-tech instruments, testing equipment and software used in sectors such as life sciences, automotive, electronics and semiconductors. It is recommending the offer, which is an 84.6% premium to its value before news of Advent’s interest broke earlier this month.
But the battle may not be over. Rival private equity firm Kohlberg Kravis Roberts (KKR) hasn’t abandoned its own interest in Spectris.
KKR just told the City that it has been “engaging constructively” with the board of Spectris, having made its own takeover proposal at the start of June.
While no revised proposal has yet been made, KKR insists it is actively engaged in the advanced stages of due diligence and arranging financing commitments, and urges Spectris’s shareholders to take no action with regards to the Advent offer….
Analysts at RBC Capital Markets say there is “a clear and present risk of energy attacks” in the Middle East, as Iran weighs up its response.
That threat could come from the Iran-backed militias in Iraq that operate near the Basra energy facilities, they suggest.
In a note this morning, RBC point out it may take days, or weeks, before we know the Iranian response, adding:
Above all, we would caution against the knee-jerk “the worst is behind us” hot take at this stage. President Trump may indeed have successfully executed an “escalate to de-escalate” move, but a wider expansion cannot still be ruled out at this juncture.
We may be in the Rumsfeld “unknown knowns” matrix in this nine-day Middle East military conflict.
Stock markets across the Asia-Pacific region are mixed today, as investors take events in the Middle East in their stride
Japan’s Nikkei 225 index has dipped by 0.17%, while Australia’s S&P/ASX 200 index has lost 0.35%.
The mood in China is brighter, though, where the CSI 300 index is up 0.44%. Hong Kong’s Hang Seng has gained 0.55%.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, says there is a “fascinating calm” in the markets after the US attack on Iran, adding:
Global equities will likely remain under pressure at the open – but judging by how oil prices reacted to the weekend news, the selloff could remain relatively soft compared with the heaviness of the headlines.
S&P futures [the US stock market] are down about 0.30% – they’re behaving like a normal Monday. And that, I find extremely interesting. It really feels like markets have become increasingly unreactive to the news. The lack of reaction is fascinating.
The US dollar has risen, a little, against a basket of currencies today as investors seek out safe haven assets.
The dollar index has gained 0.3% this morning, while the pound has slipped by 0.1% to $1.3433.
Carol Kong, currency strategist at Commonwealth Bank of Australia, said the markets are in wait-and-see mode on how Iran responds, with more worries about the positive inflationary impact of the conflict than the negative economic impact.
Kong explains:
“The currency markets will be at the mercy of comments and actions from the Iranian, Israeli and U.S. governments.
The risks are clearly skewed to further upside in the safe haven currencies if the parties escalate the conflict.”
IMF’s Georgieva warns of growth risks from US strikes on Iran
The head of the International Monetary Fund has warned that last weekend’s US strikes on Iran could hurt global growth, if the consequence ripple beyond the energy markets.
Kristalina Georgieva told Bloomberg TV this morning that the Middle East crisis added to global uncertainty, explaining:
“We are looking at this as another source of uncertainty in what has been a highly uncertain environment.”
Georgieva said the IMF was watching energy prices closely, warning that a rise in oil prices could have knock-on economic impact. She says:
“There could be secondary and tertiary impacts. Let’s say there is more turbulence that goes into hitting growth prospects in large economies — then you have a trigger impact of downward revisions in prospects for global growth.”
Georgieva is also hoping that energy supply routes will not be disrupted, saying:
“Let’s see how events will develop.
I pray no.”
IMF's Kristalina Georgieva warned that the US strikes on Iran could potentially have broader impacts beyond energy channels, as global uncertainty escalates https://t.co/yqdC6u3HMF
— Bloomberg (@business) June 23, 2025
Updated
Introduction: Oil dips back from five-month high amid Iran crisis
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The oil price has hit its highest level since January, after the US bombed Iran’s nuclear facilities over the weekend.
Traders are in a largely risk-off mood, as they weigh up the chances of further escalation in the Middle East, and ponder possible Iranian retaliations. But there’s not a full-blown panic in the markets.
There was an early leap in the oil price when the new trading week began; crude prices surged over 4%, pushing a barrel of Brent crude to a five-month high of $81.40 per barrel (up 5.7% on the day).
But… it’s slipped back even before traders in the City of London reached their desks, and is now up 1.7% at $78.32 per barrel.
Yesterday, Iran’s parliament voted to shut down the Strait of Hormuz, though which a fifth of the world’s oil is transported. If it happened, that could create a supply shock that drives up the price of energy, fuelling inflation and hurting growth.
In response, Marco Rubio, the US secretary of state, warned it would be “economic suicide” for Iran to close the Strait, and urged China to sway Tehran on this point.
Rubio told Fox News:
“I encourage the Chinese government in Beijing to call them about that, because they heavily depend on the Straits of Hormuz for their oil.”
Holger Schmieding, chief economist at Berenberg Bank, says the Strait of Hormuz is “the key economic risk to watch”. But, he also argues that a protracted disruption to energy flows in the Gulf region “seems unlikely”, as trying to throttle energy exports would be a high-risk strategy for Tehran.
Schmieding told clients this morning:
For more than two decades, the Iranian regime has sought to destabilise various parts of the Middle East. On its own, a big setback to Iran‘s apparent attempt to acquire nuclear weapons should count as a positive.
In the short run, the US “one off“ strike against three Iranian nuclear facilities raises the geopolitical risks in the region to a new level. Markets will probably shift into “risk off” mode as they await the Iranian response. In the long run, however, a severely weakened Iranian regime could turn into a significant positive for the region.
The agenda
Today: UK government to publish its industrial strategy
9am BST: Eurozone flash PMI manufacturing and services survey for June
9.30am BST: UK flash PMI manufacturing survey and services for June
2pm BST: Christine Lagarde testifies to the Committee on Economic and Monetary Affairs of the European Parliament in Brussels
2.45pm BST: US flash PMI manufacturing survey and services for June
Updated
