Market Update 19th June: Geopolitical Risk Rattles Sentiment, Fed Still in Wait and See Mode

Markets woke up this morning gripped by a familiar cocktail of central bank caution and geopolitical jitters with risk assets under pressure and haven plays in demand. Let’s unpack what traders are watching right now.

Fed Holds Fire, But It’s What They Said That Matters

The Fed held rates steady overnight, as expected but the real takeaway was the tone. Powell didn’t give the doves much to chew on. Instead, he hinted that inflation could heat up over the summer, partly due to those new tariffs kicking in.

Despite this, the dot plot still shows two cuts pencilled in for 2025 but that’s far from a done deal. A growing camp within the Fed wants to keep rates on hold longer. The takeaway? Inflation is sticky, and cuts will come slower than markets want.

Geo-Risk Returns: US–Iran Strike Fear Spikes Oil & Nerves

Just as traders were digesting the Fed, geopolitical risk burst back onto the screens. Reports emerged overnight that the US may launch a strike on Iran “as early as this weekend.” The news has put a serious bid under oil and triggered a broad flight to safety.

This isn’t just headlining noise a strike on Iran raises the spectre of wider regional instability and supply chain shocks, especially via the Strait of Hormuz. Markets are bracing for a potential inflation shock just when the Fed can least tolerate it.

If you’re in the market today, expect thinner liquidity, choppy flows, and headline-driven reactions. The Fed may not have spooked the street outright, but any geopolitical shock that stokes oil prices could turn Powell’s wait-and-see stance into an even tougher juggling act.

Anyway till next time, all of you trade safe!

James Trescothick
Head of Market Research and Market Analysis

Risk Disclaimer: This information is for educational purposes only and does not constitute investment advice. Financial markets involve risks, and past performance is not indicative of future results. Always conduct your own research and seek professional advice before making investment decisions.