Stocks slip, oil jumps as Trump calls for Tehran evacuation
June 17 (Reuters) - U.S. stock futures slipped and oil prices rose on Tuesday, as investors were rattled by U.S. President Donald Trump's call for everyone to evacuate Tehran with the fifth-day of Israel-Iran fighting sowing fears of a broader regional conflict.
Markets were on edge after a separate report said that Trump had asked for the national security council to be prepared in the situation room as he cut short his visit to the Group of Seven summit in Canada.
Trump had earlier urged everyone to immediately evacuate Tehran, and reiterated that Iran should have signed a nuclear deal with the United States.
The latest developments sparked a wave of risk-off moves in early Asian trading. S&P 500 futures fell 0.46%, European futures slumped 0.69%, while crude prices , briefly jumped more than 2%.
"Suspicion is that we're about to see the U.S. begin some sort of military action in Iran and we're now seeing some risk aversion because it brings another element of uncertainty into the market," said Tony Sycamore, a market analyst at IG.
Wall Street had closed higher on Monday after sources told Reuters that Iran was seeking a Trump-mediated immediate ceasefire with Israel, which also cooled a rally in crude prices.
The Iran-Israel air war - the biggest battle ever between the two longtime enemies - escalated on Monday with Israel targeting Iran's state broadcaster and uranium enrichment facilities.
The heightened uncertainty and fluid Middle East situation bolstered investor moves towards traditional safe-haven assets such as gold which rose 0.5%, while a rise in U.S. Treasuries pushed yields lower across the curve. The yield on the benchmark 10-year note was down about 2 basis points at 4.43%.
The dollar firmed against the euro , yen and sterling as it reprised its role as a safe asset even as it held to broadly tighter ranges.
MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), opens new tab was a tad higher, while futures tracking Hong Kong's Hang Seng index were also marginally higher.
Outside of geopolitics, interest rate decisions by a host of central banks will be the prime focus for investors this week with the Bank of Japan's verdict expected later in the day.
At the end of its two-day policy meeting, the BOJ is widely expected to maintain short-term interest rates at 0.5%, but markets will be keen on the institution's outlook on quantitative tightening.
Japan's Nikkei (.N225), opens new tab edged up 0.5%, while the yen was slightly weaker at 144.96 per dollar.
Investors are expecting the BOJ to consider slowing reductions in its bond purchases next year, as the central bank focuses on avoiding big market disruptions and tries to wean the economy off a decade-long, massive stimulus.
It would be the first decision since the recent bond auctions had shown eroding appetite for freshly issued longer-dated debt and drove the country's bond yields to record highs. On Tuesday, yields on 30-year and 40-year bonds were broadly steady.
In a week filled with central bank meetings across the globe, investors will be looking to comments from officials as they navigate Trump's erratic tariff policies and their impact on the global economy.
The Federal Reserve is expected to hold rates steady on Wednesday but the focus yet again will be on the path Fed Chair Jerome Powell charts out for future rate cuts. Traders are pricing in two cuts by the end of the year.
"To be a central banker right now is one challenging job and on top of the tariff situation, the trade policy and the inking of deals before deadlines you have this uncertainty from the Middle East," said IG's Sycamore.
"Macro backdrops don't get any more tricky than what we're seeing at this point in time."
In commodities, the risks of prolonged unrest in the Middle East and disruption to oil supply sent prices higher. Brent crude futures contract was last up 0.34% at $73.47 a barrel. West Texas Intermediate crude was last up 0.43% at $72.09.
Gold prices were fetching $3,393.05 per ounce, up 0.3% on the day.
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Breakingviews - Beijing has more at stake in Iran besides just oil
HONG KONG, June 17 (Reuters Breakingviews) - Beijing has far more at stake in Iran besides just oil. China has not only benefited from importing heavily discounted Iranian crude, it has inched up its strategic infrastructure investments into the country since the duo signed a $400 billion pact in 2021. If the regime in Tehran is severely weakened or changes, China also will lose a key diplomatic lever in the Middle East. Despite Washington's efforts to use sanctions to curb oil exports from Iran, it has become an increasingly important supplier to China. Crude shipments to the People's Republic from Malaysia, a major trans-shipment hub, have tripled to 70 million tonnes last year from 2021, according to data from the Chinese Customs – third after Russia and Saudi Arabia. Moreover, Iran's strategic location makes it a crucial cog in President Xi Jinping's signature Belt and Road policy to enhance his country's physical and economic connectivity with the world. As of 2023, China accounted for 3% of Iran's $6 billion worth of foreign direct investments. That pales in comparison to, say, Russia's 27% contribution, but China is ramping up its support in other ways: Iran has turned to the People's Republic for "thousands of tons of ballistic-missile ingredients", for instance, to build its military prowess, the Wall Street Journal reported, opens new tab in June, citing sources. The trio also conducts regular joint naval drills together. The escalating conflict threatens to undermine Beijing's nascent ambitions in Gulf politics too. Just two years ago, Chinese diplomats hailed a 'new paradigm, opens new tab' for resolving friction in the Middle East after they brokered a deal to restore diplomatic ties between Iran and Saudi Arabia. War also throws up a fresh test of China's diplomatic ties further afield too. Iran joined the Shanghai Cooperation Organisation in 2023. However, India, a founding member, on Saturday issued a rare public rebuttal, opens new tab of the SCO's statement denouncing Israel's attacks, underscoring a potential rift between Xi and Indian Prime Minister Narendra Modi, who has fostered closer ties with Israel. The danger for China is this could be a moment that ultimately erodes its ambition to project power in the region and one that gives rise to rival infrastructure projects, such as the ambitious India-Middle East-Europe Economic Corridor, aimed at diluting Beijing's influence. For now, it appears the reshaping of the Middle East may not work in its favour.
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Breakingviews - Donald Trump's US chip revival is half-assembled
LONDON, June 17 (Reuters Breakingviews) - Donald Trump is hoping to secure American dominance in semiconductors over China. The president wants to bring production of chips back to the U.S., while courting allies. But success will take years and much more capital, while looming tariffs and unclear export rules add cost and confusion. When it comes to stimulating a key industry, the U.S. strategy is falling short. For an example of how to approach state-backed industrial planning, look to China. The People's Republic has already become a powerhouse in making solar panels and batteries for electric vehicles. A decade ago, President Xi Jinping launched his 'Made in China 2025' plan with the intention of reducing the country's reliance on foreign semiconductors from 85% to around 30%. The urgency was clear: chips had overtaken oil as China's largest import. Nearly a decade later, China has not met its goal, but local capacity is ramping up. Of the 51 wafer fabrication plants currently under construction worldwide, 23 are in China, according to an industry expert. It's a direct result of government funding: state-led investment in chips has probably exceeded $150 billion since 2014, according to, opens new tab the Economist Intelligence Unit. Little wonder that the U.S. is worrying about its dominance of advanced chips and artificial intelligence. While Huawei CEO Ren Zhengfei says, opens new tab the Chinese tech giant's chips are still one generation behind U.S. rivals, Nvidia (NVDA.O), opens new tab CEO Jensen Huang has said Huawei's latest processors are approaching parity with the $3.5 trillion company's cutting-edge H200 graphics processors. These are central to training advanced AI models. Chinese players like DeepSeek are also showing signs of catching up. For the Trump administration, maintaining the U.S. lead starts with safeguarding demand for American products. That means ensuring key international customers in Europe and the Middle East don't drift toward Chinese suppliers. It's one reason Trump scrapped his predecessor Joe Biden's 'diffusion rule', which set country-specific quotas for advanced chips. The rule risked restricting previously friendly nations' access to semiconductors, pushing them into Huawei's arms. On the supply side, Trump wants to bring manufacturing back onshore. As most advanced chips are still made in Taiwan, any diversification of supply chains makes sense. The $52.7 billion Biden-era CHIPS and Science Act -- which includes, opens new tab $39 billion in subsidies for domestic chip manufacturing -- is a start, but progress is slow. The bill only releases funds as projects meet staged milestones. Trump has criticised the act, while also using it to force private companies to crank up investment stateside. Taiwanese giant TSMC ( opens new tab, for instance, committed to spending over $100 billion in the U.S. as it finalised state funding of $6.6 billion. GlobalFoundries (GFS.O), opens new tab this month pledged, opens new tab $16 billion alongside a $1.5 billion subsidy. Tariffs are another of Trump's favoured tools. He has asked the Commerce Department to investigate chip supply chains under Section 232, citing national security. But applying levies to semiconductors is fraught. For a start, the U.S. imports relatively few chips, but lots of products which contain them. Semiconductors worth less than $40 billion arrived in the country in 2024, while the U.S. imported electronic goods worth $486 billion, according to the International Trade Centre. Trying to impose tariffs on components inside devices like laptops and iPhones would be tricky. There's no easy way to tell where the chip was made once it's been packaged. Even if the Trump administration can successfully tilt the playing field towards domestic manufacturing, however, resilience still comes at a price. Proposed subsidies would make the cost of building semiconductor fabrication plants in the United States as competitive as in Asia, according to an industry analyst. But running those plants in a high-wage economy is another challenge: McKinsey & Company estimates operating costs are 35% higher in the U.S. than in Taiwan. Buyers of U.S.-made chips for cars or medical machines would have to absorb that premium or pass it on to customers. It also implies that semiconductor firms will need ongoing support in the form of tax breaks or operational subsidies as they shift supply chains. However, Trump has made hostile noises about the costs of the CHIPS Act. One key incentive, a 25% investment tax credit for every dollar chipmakers spend on capital expenditures, is set to expire unless renewed. 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It would also require U.S. equipment makers like $114 billion Lam Research (LRCX.O), opens new tab to sacrifice revenue which could be as much as 30% of the total top line. Trump's chaotic and go-it-alone instincts on tariffs risk undermining the partnerships he will need to isolate China. China's chip campaign still falls short in several areas, including scale and efficiency. But Beijing's strategic clarity, persistence, and willingness to absorb long-term costs signal its serious intent. By contrast, Trump's U.S. chip revival is at best half-assembled. Follow Karen Kwok on LinkedIn, opens new tab and X, opens new tab.
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40 minutes ago
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Israel-Iran war already takes toll on oil and gas sector
LONDON, June 17 (Reuters) - Critical energy infrastructure in Israel and Iran has not escaped unscathed from the first few days of the countries' escalated conflict. Worst-case scenarios have yet to be realized, but the war is already having a notable impact on energy production and exports in both countries. Benchmark Brent crude oil prices jumped 7% to over $74 a barrel on Friday after Israel launched an unprecedented wave of airstrikes on Iran, prompting Tehran to fire hundreds of ballistic missiles at Israel. Some energy facilities have been hit in both countries since then, leading to significant disruptions to production. However, prices receded slightly on Monday, as it appeared that both sides were not immediately targeting the most sensitive energy infrastructure and supply routes, and following a report that Iran was seeking ceasefire mediation. Investor focus remains squarely on the Strait of Hormuz, a narrow and vital waterway between Iran and Oman in the Mideast Gulf through which between 18 and 19 million barrels per day of crude oil and fuels flow, nearly a fifth of the world's consumption. Another 85 million tons of liquefied natural gas from Qatar and the United Arab Emirates were also sent through the strait last year, equivalent to around 20% of global demand. Disrupting maritime activity through the strait would thus severely impact oil and gas markets, pushing prices much higher, possibly into three-digit territory. This doomsday scenario has not yet played out, but disruption to both Iran's and Israel's energy industries has been meaningful nonetheless. Perhaps most notably, Iran's oil exports appear to have essentially ground to a halt in recent days. Total Iranian crude and condensate oil exports this week are currently forecast to reach 102,000 bpd, compared with a weekly average of 1.7 million so far this year, according to analytics firm Kpler. Critically, exports from Kharg Island from which Iran exports over 90% of its oil, appear to have completely halted since Friday. No tankers were anchored at Kharg Island as of Monday, according to LSEG satellite ship tracking data. However, Iran has roughly 27.5 million barrels stored in tankers outside the Gulf, according to Kpler data, which would enable it to sell oil for a few weeks. Iran has produced an average of 3.4 million bpd of crude oil and another 1.3 million bpd of condensate so far in 2025, according to the U.S. Energy Information Administration, with China appearing to be the main buyer. Israel has also directly targeted some Iranian energy infrastructure. Iran on Saturday partially suspended, opens new tab gas production at the South Pars gas field in the Mideast Gulf, in what was probably Israel's first strike on the country's oil and gas sector. South Pars, which is shared with Qatar, is the world's biggest gas field. It produces around 610 million cubic meters of natural gas per day, accounting for around 80% of Iran's total gas output, opens new tab. The portion controlled by Qatar, referred to as the North Field, provides the natural gas for the Gulf state's enormous LNG industry. The field also produces around 700,000 barrels of per day of condensate, a light oil that is used as feedstock to produce fuels and petrochemicals. The Persian Gulf Star condensate refinery, which became Iran's largest refinery when it came online in 2017, can process 420,000 bpd of condensates from South Pars. While the extent of the damage to the South Pars field is unknown, any serious issues could meaningfully impact condensate production. In addition, Israel has targeted the Shahr refinery outside Tehran as well as a number of fuel depots around the capital city. Again, the full impact of these strikes on production is unknown. The conflict has also already had a significant effect on Israel's energy industry. Israel on Friday shut down two of its three offshore natural gas fields, the Chevron-operated Leviathan field, opens new tab and Energean's Karish field, reducing Israel's supply by nearly two thirds. While the country's Tamar field continues to operate, Israel will have to turn to coal and fuel oil as a substitute for the gas in its power plants. These supply outages have had a meaningful impact on Israel's gas exports. Leviathan produced 11.33 billion cubic meters (bcm) in 2024, most of which is exported to neighbouring Egypt and Jordan. Israeli gas accounts for about 15-20% of Egypt's consumption, data from the Joint Organisations Data Initiative (JODI) shows. The disruption of Israel's gas supply led Egyptian fertilizer producers to halt operations on Friday. Finally, the ORL oil refinery in Haifa, one of Israel's two refineries, said on Monday it had shut down all its facilities after a power station used to produce steam and electricity was significantly damaged in an Iranian missile strike. It remains to be seen how long the two sides will continue to exchange blows. If a ceasefire is quickly reached, the ultimate impact on energy markets could be relatively limited. But given how much this conflict has escalated in only a few days, the worst-case scenarios cannot be fully discounted. Enjoying this column? Check out Reuters Open Interest (ROI), opens new tab, opens new tab, your essential new source for global financial commentary. ROI delivers thought-provoking, data-driven analysis. Markets are moving faster than ever. ROI, opens new tab, opens new tab can help you keep up. Follow ROI on LinkedIn, opens new tab, opens new tab and X., opens new tab
