Tensions between Israel and Iran are escalating, potentially leading to a full-blown war that may impact the US economy. Federal Reserve Chair Jerome Powell stated that while energy prices may temporarily spike, the US economy is far less dependent on foreign oil than it was in the 1970s. However, economists warn that closure of Strait of Hormuz, one of the world’s most important oil chokepoints, by Iran could significantly disrupt seaborne oil and gas flow, leading to a spike in energy costs and thus impacting the global economy.
Oil prices rose by nearly 3% as a result of these tensions, with the Brent global benchmark reaching $78.85 per barrel, its highest since January. US crude oil also showed similar trends. JPMorgan pointed out that further destabilization of Iran, a major oil producer, could sustain higher oil prices for extended periods.
Shares of Berkshire Hathaway fell by over 10% following Warren Buffett’s announcement of his upcoming departure as CEO. Some experts predict an additional decline in the shares after Buffett’s exit due to his significant role in the company’s success.
In Europe, stocks closed lower as the Israel-Iran conflict becomes the focus, with London’s FTSE, Germany’s DAX, France’s CAC 40 and Italy’s FTSE MIB all showing declines. The US Federal Reserve’s decision to keep interest rates steady is also being weighed by investors.
Meanwhile, the Buss family agreed to sell the majority stake of the Los Angeles Lakers to businessman Mark Walter at a valuation of $10 billion, a record for NBA valuations. Jeanie Buss will retain a minority stake in the team and her governor seat.
As global equity market volatility continues, fund managers are increasingly turning their attention to emerging markets. Notably, despite new tariff rates set to take effect on July 8, Bank of America’s latest Fund Manager Survey highlights that institutional investors are not overly concerned that the high tariff rates will endure. BofA polled 222 fund managers, collectively managing $587 billion assets, and found that net allocation to equities from emerging markets is now at its highest since August 2023. Goldman Sachs also recently launched its Emerging Markets Green and Social Bond Active ETF, further evidence of growing interest in developing economies.
In other market news, Asia-Pacific stocks saw declines, largely driven by Hong Kong’s Hang Seng index which fell by over 2%. Investor concerns included the U.S. Federal Reserve’s decision to maintain interest rates and the continuing Middle East conflict. China’s CSI 300 was down by 0.82%, Japan’s benchmark Nikkei 225 lost 1.02% to close at 38,488.34, and the Topix declined 0.58% to end the trading day at 2,792.08. The Dow finished the trading day down 44.14 points at 42,171.66, while the S&P 500 fell 0.03% to close at 5,980.87. The Nasdaq Composite was slightly up, gaining 0.13% to settle at 19,546.27.
In its latest meeting, the Federal Reserve retained interest rates steady amid expectations of higher inflation and lower economic growth. Indications suggest two cuts by the end of 2025 are being anticipated, however, expectations for 2026 and 2027 both saw a decrease by one rate cut, suggesting that officials remain uncertain about the future of rates. The updated Federal Reserve predictions revised the gross domestic product’s increase to a slower 1.4% pace in 2025, and inflation is projected to reach 3%.
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America’s economy could face a war shock
Oil prices rise nearly 3% as Israel vows to intensify attacks on Iran
Berkshire shares drop double digits as ‘Buffett premium’ disappears, and some expect more selling
European stocks close lower as Israel-Iran conflict dominates focus
Los Angeles Lakers owners sell majority stake in the team at $10 billion valuation
Fund managers are pouring money into emerging markets. Here’s where investors see opportunities
Hong Kong stocks lead declines in Asia-Pacific markets as investors weigh Fed decision, Middle East conflict
Fed holds key rate steady, still sees two more cuts this year