Market Shake-Up: Crashes, Conflict & Currency Moves

An Air India Boeing 787 Dreamliner crashed shortly after takeoff from Ahmedabad on June 12, tragically killing all 242 passengers and 27 people on the ground. Preliminary reports point to mechanical failure during climb-out.

The market reaction was swift and brutal:

• Boeing shares plunged nearly 8% in pre-market trading, erasing more than $15 billion in market cap.

• Aerospace suppliers like GE Aerospace and Spirit AeroSystems also posted sharp losses.

• Analysts worry this could derail Boeing’s fragile recovery path and dent investor sentiment toward the aviation sector broadly.

Market impact:

• Flight safety concerns heightened risk-off sentiment.

• Safe-haven currencies like the Japanese Yen (JPY) and Swiss Franc (CHF) strengthened.

• Equity indices in the U.S. and Asia slipped, led by industrial and manufacturing names.

• CFD traders may find increased volatility across U.S. indices and Boeing-related stocks.

Overnight, Israel launched precision airstrikes on Iranian military infrastructure around Tehran, reportedly targeting nuclear facilities and arms depots. The strikes follow weeks of rising tensions, including alleged drone threats and cyberattacks.

Although the U.S. confirmed it will not participate directly, it has begun partial evacuations of diplomatic staff in the region. Oil markets responded sharply:

• Brent crude surged over 4% to approach $74/barrel.

• Gold ticked higher as investors sought safe havens.

 FX/Commodity impact:

• Geopolitical risk premium lifted USD, CHF, and JPY.

• CAD and NOK, both oil-linked currencies, gained modestly.

• Commodity CFDs — especially oil and gold — saw volume spikes as traders positioned for further escalations.

High-level trade officials from the U.S. and China have resumed in-person negotiations in London. The dialogue is reportedly focused on:

• Export controls on advanced tech

• Tariff rollback discussions

• Agricultural and digital trade cooperation

While no major breakthroughs have emerged yet, even the resumption of formal dialogue signals a potential thaw after months of tension.

 Forex outlook:

• AUD and NZD, both highly trade-sensitive, saw modest gains.

• USD/CNY remains in focus, with offshore yuan holding steady amid cautious optimism.

• Equity markets in Asia responded positively, though gains remain capped by geopolitical headlines.

The World Bank has slashed its 2025 global growth forecast from 2.7% to 2.3%, citing:

• Fragile post-COVID recovery

• Rising geopolitical risk

• Ongoing inflation and policy divergence

• Supply chain re-fragmentation

 FX & Market outlook:

• Risk-off sentiment deepened, with EM currencies like MXN, ZAR, and TRY under renewed pressure.

• Developed market central banks may be forced to reconsider easing timelines, impacting rate-sensitive trades.

• Global equity indices reacted with caution, and volatility ticked up across futures markets.

While U.S. Treasury yields remain elevated — suggesting stubborn inflation and hawkish Fed expectations — the USD Index hit its lowest level of 2025. Markets are pricing in rising recession risks despite no official rate cut in sight.

 Currency moves:

• EUR/USD breached 1.09, gaining on dollar weakness.

• USD/JPY dropped below 154 as investors flocked to yen amid global jitters.

• Scandinavian currencies like SEK and NOK have outperformed this week, up over 12% YTD against USD.