Israel-Iran Conflict Sparks Market Selloff and Oil Rally

Let's get to the big story breakdown now.

Futures sinking after Israel launched strikes on Iranian nuclear sites.

The equity and crypto markets fell after the attacks, while commodities gold spiked as well as oil.

Now Israel's Prime Minister named the operation Rising Lion and says the attacks will continue for as long as needed to prevent Iran from producing a nuclear weapon.

Meanwhile, Trump's threat of unilateral tariffs looms in the background.

Wall Street is watching.

For any updates on trade policy, especially between the US and China as talks this week have been in the spotlight.

Now earlier this week, Trump saying he might extend the July 8th deadline for completing trade deals with other countries before higher tariffs kick in, but he also suggested that extensions may not be needed.

US and Chinese officials reached a framework for future trade talks in London after two days of discussions this week.

The agreement does remain vague, but both countries.

Agree to ease some restrictions on rare earth metals and foreign students as part of the deal.

Well, joining me on this Friday morning here at the Exchange is Peter Tuchman, senior floor trader at Trademos.

So Peter, good morning.

So here we are on this Friday morning, quite a different geopolitical landscape compared to Monday, but there are concerns all this week ahead of this attack yesterday evening East Coast time.

So what do you expect to see in the market as a reaction?

OK, so you know it is very often more times than not, that geopolitical will really have an effect on the market, especially in regions around the world that are affecting commodities as well as things, you know, as sensitive as the Middle East, right?

The Middle East has a lot of special sensitivity, not only because of oil, but basically it's a relationship that the United States has right with with Israel and obviously with the Arab countries.

So that is it and net net.

You know, very often than not, depending on what's happening in the market otherwise, the reaction to geopolitical things could be more than not.

Obviously this is a huge attack and obviously it's been pending for a while, but it was not in the forefront of people's minds, so I don't think the market was sort of engaging in the negative way about it, and it basically waited until the actual attack happened to really sell off.

The initial reaction was bigger than the.

This is a little bit of a muted version of it from where it was midnight.

I believe it had actually gone down 100 points on the spy at the lows and it's bounced back and very often that's what we'll see.

It's an initial, you know, when it happens after hours, it's an initial knee jerk reaction and very emotional, and then we tend to, we tend to get, we tend to rally back around it.

But you know what, look, there's a lot around this, right?

This could be ongoing, you know, and and and. is in a region that is the most sensitive, especially when it comes to oil.

Yeah, and Peter, there are so many layers to this story, and we're seeing this play out in the broader markets.

So when we're talking about equities or even commodities, the currency markets, and even crypto, we're seeing that safe haven demand on this risk off market.

But you and I, we've been on the trading floor through a lot of crises, so we'll continue to monitor the situation and the G7 meeting.

Of leaders will also be kicking off this weekend as well, but I'm sure these leaders will be talking about other things in addition to geopolitics.

But as we head into next week, Peter, we do have the Fed meeting.

So in terms of what we've been seeing here in the US in terms of the economy, what are you focused on in the near term?

Well, look, I mean this week we know you and I spoke on Monday that you know that we were looking at CPI and PPI, which are inflationary. numbers and they were, they were going to tell us what effects tariffs have had so far and as you as you just said, you know that they were, they were right in line and so there was not any radical increase in costs attributed to tariffs but to be perfectly honest, you know, we've not really seen, we don't know anything and nothing's etched in stone as you went on to also describe the deal with China.

Yes, it's in the works, but it's not done.

There is a postponement.

You know, to July 9th on the EU deal, right, and then and then obviously an India deal and a UK deal.

So I think there are still a lot of moving parts, right?

I mean, the market, as you know yesterday midday, you know, the market obviously reacted if you everyone was watching at 2 o'clock just to highlight how markets can react to geopolitical things when the markets are open.

It was exactly at 2 o'clock when the US State Department came out and Announced that they were pulling back unnecessary workers from or none other than necessary workers from Bahrain and Qatar in the region.

Obviously the US had had prior knowledge of something that was going on.

At the end of the day, obviously the goal of the administration is to protect all citizens, even though we have especially because we were not.

It was a unilateral attack even though the US does support Israel and they are they are.

They're made available a lot of our weaponry to fight whatever wars they're going to fight.

I think the Fed meeting next week will be very telling.

Obviously all eyes are on the Fed, especially with the pressure that Mr.

Trump has put on Jay Powell, even though there is supposed to be a bit of a wall between them based on the economic data that came out, PPI and CPI, about interest rate cuts.

Now we do know that normally we would be up for a cut right now except for the fact that tariffs have set us in a stage towards a low growth or no growth landscape.

And when you're in that kind of a situation and as the economists have told me, when you're in a low growth, slow growth or no growth environment and you try to cut rates, what you end up suffering from is stagflation, and that's something that is really hard to come back from.

So I think all eyes will be on the Fed.

That's why the Federal Reserve has yet to cut rates.

That's why Mr.

Trump, not accepting that little bit of information, wants to pressure them to cut rates.

So we do have a bit of butting heads there, and I think look, a lot, we'll know a lot more after the weekend as this story unfolds and as people anticipate the Fed meeting next week.

OK, Peter, thank you so much for joining me on this Friday morning.

We will have to leave it there.

We'll see you back here.

Always a pleasure.

Thank you, Bob.