Geopolitical Tensions Escalate; Gold and Silver Jump; US Equity Futures Rise

Lead Geopolitical tensions in the Middle East have intensified, with reports of Iranian missile and drone strikes on US radar and communication sites. Gold is up 1.53% and silver surged 3.26%. US equity futures are showing gains, with Nasdaq futures up 1.19% and S&P 500 futures up 0.50%. Session narrative Asian markets are reacting to significant geopolitical developments in the Middle East. Reports indicate that Iran's Revolutionary Guards have claimed missile and drone strikes on US radar, communications, and satellite sites in Kuwait, as well as a US military site in Jordan. This follows earlier reports of US forces launching strikes against Iran. The Pentagon has reportedly asked for $80 billion to help cover war costs, highlighting the financial implications of the escalating conflict. On the economic front, New Zealand's CPI YoY registered 4.1%, surpassing the 4% forecast, leading to a slight rise in the NZ dollar. In the UK, Average Weekly Earnings YoY came in at 4.3%, slightly below the 4.5% forecast. Equity futures in the US are trading higher, with Nasdaq futures up 1.19% and S&P 500 futures gaining 0.50%. Dow futures are also up 0.33% and Russell futures are up 0.66%. In commodities, precious metals are seeing strong gains, with gold up 1.53% and silver surging 3.26%. Copper is also up 1.91%. Conversely, crude oil prices are down, with WTI crude falling 0.61% and Brent crude down 0.99%. The US 10-year yield is up 1.26%, while the US Dollar Index is down 0.04%. Cross-asset check Equity futures are broadly positive, with Nasdaq futures leading the gains. The S&P 500 futures are also up, indicating a rebound from previous sessions. In fixed income, the US 10-year yield is higher, suggesting some risk-off sentiment or inflation concerns. The US Dollar Index is marginally lower. Commodities are split, with precious metals like gold and silver rallying significantly, often seen as safe-haven assets during geopolitical uncertainty. However, crude oil is down, which could reflect concerns about global demand or a temporary easing of supply fears despite the Middle East tensions. Copper and natural gas are also showing gains. Themes & continuing stories The primary theme remains the escalating geopolitical tensions in the Middle East. The direct claims of Iranian strikes on US military assets mark a significant escalation, and the market will be closely watching for further developments and responses. The financial burden of this conflict is also a continuing story, with the Pentagon's request for substantial funding. Another ongoing narrative is the trade dispute between the US and Canada, with President Trump imposing additional 50% tariffs on Canadian goods. This could lead to retaliatory measures and impact North American trade relations. Earnings reports from companies like Novartis and Julius Baer are also providing company-specific insights, though overshadowed by macro events. What’s ahead Looking ahead, market participants will be focused on key economic data releases from Europe and Canada. The ECB Bank Lending Survey is due at 08:00 UTC, providing insights into credit conditions in the Eurozone. This will be followed by the ZEW Survey – Economic Sentiment for both the EMU and Germany at 09:00 UTC, which will offer a gauge of economic confidence. Later in the day, Canadian CPI data, including the YoY and MoM figures, as well as the BoC Consumer Price Index Core, will be released at 12:30 UTC. These inflation figures will be crucial for understanding the Bank of Canada's monetary policy outlook. The geopolitical situation in the Middle East will also remain a dominant factor, with any new developments likely to trigger market reactions.