Tensions over Israel-Iran conflict increase pressure on global markets

The conflict between Israel and Iran continues to escalate, with both sides launching strikes and the leaders ' statements remaining tough. Possible US intervention in the standoff raises serious concerns. Russia warned that this could lead to a "terrible spiral of escalation."

Markets are reacting to increased uncertainty. U.S. stock exchanges were closed on Thursday for Liberation Day celebrations, but in the evening futures declined and oil prices rose by about 3% after reports of Israeli Prime Minister Benjamin Netanyahu's order to step up attacks on Iran. The European Stoxx 600 index lost 0.83%. The biggest losses were incurred by travel and entertainment companies amid concerns about international air travel.

At the Paris Air Show, aircraft manufacturers continue to make multibillion-dollar deals, despite geopolitical risks. Airbus, according to Reuters, secured orders worth almost $21 billion by Thursday morning, including 132 firm orders from AviLease (Saudi Arabia), ANA (Japan) and LOT (Poland). Boeing has 41 orders, while Embraer has 15. At the same time, the terms of such contracts are stretched over years: Airbus and Boeing have a portfolio of orders exceeding 8,000 and 5,000 aircraft, respectively.

The situation in the Middle East remains a key factor for investors. Until it becomes clear whether Washington will decide to launch strikes against Iran, there will be increased volatility in the markets.

U.S. futures declined in the early hours of Thursday. WTI and Brent crude rose by about 3%. Amid geopolitical risks, the Bank of England left its key interest rate unchanged at 4.25%. The majority of the committee members voted in favor of maintaining the rate, while three supported a 25 bps cut.

In the technology market, it became known that Meta at the beginning of the year tried to acquire the company Safe Superintelligence, founded by Ilya Sutskever, one of the creators of OpenAI. According to sources, Sutskever declined the offer. At the same time, the startup's CEO Daniel Gross and former GitHub CEO Nat Friedman will participate in Meta projects through the NFDG venture fund.

In Japan, inflation reached 3.7% in May — the highest level since January 2023. The Bank of Japan kept its key interest rate unchanged at 0.5%. The country's GDP contracted by 0.2% in the first quarter.

Berkshire Hathaway shares have lost more than 10% since the beginning of May amid reports that Warren Buffett is preparing to transfer control of the company. The stock lags the S&P 500 index by about 15 percentage points.

Interest in AI technologies in China shows a new trend. Virtual avatars of Luo Yonghao and Xiao Mu during a live broadcast on the Baidu Youxuan platform collected orders worth 55 million yuan ($7.65 million) in seven hours. According to the company, the result exceeded the indicators of the same session last month with the participation of real leaders.