From Conflict to Ceasefire: How Geopolitics Moved the Stock Market
Week in Review #358 | June 23-27, 2025
Summing Up The Week
Geopolitical concerns dominated the markets this week with the Israel-Iran conflict followed by an agreed-upon ceasefire making up the majority of the moves in stocks early in the week.
Friday's PCE showing a slight increase in inflation caused a bit of a hiccup that was quickly ignored when China announced that both countries had agreed upon a framework to get the two giant economies closer to a trade deal. Obviously good news, the trade framework helped stocks stabilize going into the end of the week.
Let's take a deeper dive into the news that moved markets this week...
Market News
U.S. attacks 3 nuclear sites in Iran
After announcing a two-week deadline before making any decisions about Iran on Thursday evening, President Donald Trump revealed on Saturday that the United States had launched air strikes on three nuclear sites in Iran, reported CNN. Trump said that the U.S. had completed a "very successful attack" on sites in Fordow, Natanz, and Isfahan.
Trump made the following post on TruthSocial regarding the attack: "We have completed our very successful attack on the three Nuclear sites in Iran, including Fordow, Natanz, and Esfahan. All planes are now outside of Iran air space. A full payload of BOMBS was dropped on the primary site, Fordow. All planes are safely on their way home. Congratulations to our great American Warriors. There is not another military in the World that could have done this. NOW IS THE TIME FOR PEACE! Thank you for your attention to this matter."
Iran approves closure of Hormuz Strait, reserves all options
On Sunday, the Iranian parliament approved the closure of the Hormuz Strait, a critical waterway allowing for the passage of oil tankers, and announced it would reserve all retaliatory options after the three U.S. attacks the day before, reported CNBC and other news agencies. If closed, this would be the first time since 1972 that Strait of Hormuz would be closed.
Iran’s Foreign Minister Abbas Araghchi said Tehran reserves all options to defend itself after the "outrageous" U.S. attacks on three major nuclear facilities on Saturday. Araghchi posted on social media that the U.S. attacks would have “everlasting consequences,” adding that “every member of the United Nations must be alarmed over this extremely dangerous, lawless and criminal behavior.”
Iran claims victory over Israel amid ceasefire
A few days after the Israel-Iran ceasefire was underway, Iran's Ayatollah Khamenei issued claims of victory over Israel, reported CBS News.
"I offer my congratulations on the victory over the fallacious Zionist regime," stated a message posted on Khamenei's X account Another post claimed Israel's government "was practically knocked out and crushed under the blows of the Islamic Republic."
In a recorded video address to his nation, his first public remarks since the U.S.-brokered ceasefire with Israel took effect on Tuesday, Khamenei suggested a "large number of military and other targets" in Israel had been targeted by Iran's missiles.
Israel's strikes on Iran killed at least 30 military commanders, on the other hand, and, in combination with the U.S. strikes over the weekend, "obliterated" the country's nuclear program, according to President Donald Trump.
The U.S.-based group Human Rights Activists in Iran, which relies on a network of sources in the country, said Wednesday that the strikes had killed at least 1,054 people in Iran, including a total of 318 military personnel.
Core inflation rose to 2.7% in may, more than expected
On Friday, the Personal Consumption Expenditure (PCE) Index, the Federal Reserve's preferred gauge of inflation, was released for May, showing core PCE increased 2.7% for the month, above estimates for 2.6%, reported CNBC. Pundits have been claiming we'd see an increase in the rate of inflation due to Trump's tariffs for weeks, and, now, it looks like we may have finally seen something.
China confirms details of trade deal with United States
On Friday, the U.S. and China confirmed details of a framework for a trade deal which will allow rare earth exports as well as easing of tech restrictions, reported CNBC.
China will review items subject to export control rules and the U.S. will correspondingly cancel a range of existing restrictive measures imposed against Beijing, a spokesperson for the Chinese ministry said in the statement, without elaborating.
The statement comes after President Trump said Thursday that "we just signed with China yesterday" at an event at the White House. A White House official later clarified that the administration and China had agreed to "an additional understanding of a framework to implement the Geneva agreement."
The markets saw a restrained pop following the news, likely due to the combined release of the PCE showing an increase of inflation.
Next Week's Gameplan
In addition to another shortened trading week thanks to the July 4th holiday next Friday, we do get a number of different reports coming out. First, we see Chicago PMI on Monday, ISM manufacturing on Tuesday, and ADP's employment report on Wednesday. However, the big report comes on Thursday with June's payroll report.
For the past two months, economists have been claiming we should see weakness in the labor market, however that weakness still hasn't revealed itself. Maybe next week is that time? If so, that payroll report could have a significant impact on market momentum.
Regardless of what happens, I'll meet you back here to discuss it, friends!
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