Author: Fiona Craig

European stocks on the DAX, CAC and FTSE100 have moved lower on Tuesday after U.S. President Donald Trump urged residents of Tehran to “immediately evacuate,” signaling a potential escalation of the conflict.

In addition, Israel’s military claimed today it had killed Ali Shadmani, who it identified as Iran’s wartime chief of staff and said was the most senior military commander.

The German DAX Index is down by 0.8 percent, the French CAC 40 Index is down by 0.6 percent and the U.K.’s FTSE 100 Index is down by 0.3 percent.

RWS Holdings (LSE:RWS) surged 6.5 percent after the content solutions company unveiled a new growth strategy, focusing on growth, technology integration, and AI solutions.

Online fashion retailer ASOS (LSE:ASC) declined 1.1 percent after replacing its finance chief.

Informa (LSE:INF), which specializes in organizing events and publishing books, added nearly 2 percent after backing its full-year guidance.

Oil & gas giant BP Plc (LSE:BP.) jumped 2.2 percent and Shell (LSE:SHEL) rose 1.2 percent as oil prices rose sharply, reversing Monday’s brief decline.

Futures for the major U.S. indexes—the Dow Jones, S&P 500, and Nasdaq—are pointing to a lower open on Tuesday as Wall Street looks poised to retreat after Monday’s strong rebound.

Investors seem ready to take profits following the prior session’s gains, which had been fueled in part by hopes of de-escalation in the ongoing conflict between Israel and Iran.

Although initial reports suggested the conflict might ease—sparking Monday’s rally—concerns resurfaced after news broke that President Donald Trump left the G7 summit early to focus on the situation, raising fears of further escalation.

In a Truth Social post, Trump clarified the reason for his departure, countering French President Emmanuel Macron’s assertion that he left to help negotiate a ceasefire.

“He has no idea why I am now on my way to Washington, but it certainly has nothing to do with a Cease Fire,” Trump said. “Much bigger than that.”

The pressure on markets also comes amid disappointing economic data from the Commerce Department, which showed U.S. retail sales dropped more than anticipated in May.

Retail sales decreased by 0.9% last month, following a revised 0.1% dip in April. Economists had forecast a smaller decline of 0.6% and were expecting a 0.1% increase for April, rather than the slight drop reported.

When excluding vehicle and parts dealers—who saw a sharp sales decline—retail sales fell 0.3% in May, after remaining flat in April. Economists had predicted a slight increase of 0.1% ex-auto.

Monday’s trading session saw stocks initially climb but then give up some gains, though the market still posted solid results. The strong bounce nearly erased the steep losses from Friday, driven by escalating tensions following Israel’s airstrikes on Iran.

By the close, all three major indexes were comfortably higher: the Nasdaq surged 294.39 points (1.5%) to 19,701.21, the S&P 500 rose 56.14 points (0.9%) to 6,033.11, and the Dow gained 317.30 points (0.8%) to 42,515.09.

The early strength on Monday reflected investors’ attempts to buy stocks at reduced prices after the prior session’s selloff triggered by Middle East hostilities.

Despite ongoing clashes over the weekend, optimism remains that the conflict might stay contained. The Wall Street Journal cited Middle Eastern and European officials reporting that Iran is urgently signaling a desire to end hostilities and resume nuclear talks.

“Despite a weekend of violence between the two countries, investors showed no signs of panicking, judging by movements in financial markets on Monday,” said Russ Mould, investment director at AJ Bell.

He added, “The Middle East conflict remains a fluid situation and there is the potential for markets to still experience sudden jolts if the tension escalates further.”

Investors are also eyeing the upcoming G7 summit in the Canadian Rockies, where world leaders are expected to discuss trade progress ahead of the expiration of President Trump’s 90-day pause on “reciprocal tariffs” early next month.

Attention will also turn to the Federal Reserve’s next monetary policy announcement. While interest rates are widely expected to remain unchanged, traders will be looking for clues in the Fed’s statement and officials’ forecasts regarding the future path of rates.

In sector action, airline stocks staged a notable recovery, with the NYSE Arca Airline Index jumping 3.3% after several days of declines.

Semiconductor stocks also performed strongly, as the Philadelphia Semiconductor Index surged 3.0%.

Computer hardware, financials, and telecom sectors showed considerable gains, while pharmaceutical and oil services stocks lagged, bucking the broader market rally.

U.S. stock futures dipped on Tuesday amid escalating tensions in the Middle East, where ongoing clashes between Israel and Iran have investors cautious. While hopes persist for a ceasefire, discussions reportedly continue behind the scenes, including potential talks between U.S. officials and Tehran. Meanwhile, U.S. President Donald Trump left the Group of Seven summit in Canada early, denying that his departure was related to ceasefire negotiations. On the economic front, attention turns to U.S. retail sales data due later in the day, while the Bank of Japan announced a slower pace for tapering its monthly bond purchases starting next fiscal year.

Futures Fall as Geopolitical Risks Weigh

By early Tuesday morning, Dow futures were down 330 points (0.8%), S&P 500 futures slipped 0.7%, and Nasdaq 100 futures dropped by 157 points (0.7%). This comes after Wall Street posted gains Monday, as analysts noted some easing of concerns regarding the Israel-Iran airstrike exchanges.

Trump’s comments at the G7 summit have added some optimism around new trade deals, especially with Canada, despite ongoing tariff issues. Canada, a major supplier of steel and aluminum to the U.S., faces existing tariffs, but talks are underway that could lead to an updated economic and security agreement within a month. Trump also signed a trade deal with the UK that reduces some import tariffs, though steel and aluminum levies remain contentious.

Intensifying Conflict in the Middle East

Israel’s military announced several extensive strikes on Iranian military targets, including missile storage and launch facilities in western Iran. Additionally, Israeli forces claimed to have killed a senior Iranian general in Tehran overnight, though Iran has not confirmed this. Reports indicate U.S. officials are exploring the possibility of nuclear deal talks with Iran, involving envoys from both sides, as an effort to reduce tensions. However, Iran reportedly demands that Israel halt its airstrikes before agreeing to negotiations.

President Trump has maintained a tough stance, warning civilians to evacuate Tehran and insisting Iran must not enrich uranium, despite Tehran’s assurances that it is not pursuing nuclear weapons.

Oil and Gold Prices Steady

Oil prices saw a slight increase amid the turmoil, while gold remained stable, continuing to serve as a safe haven amid geopolitical uncertainty.

Trump’s Early Exit from G7

Trump left the G7 summit ahead of schedule, denying that the move was linked to ceasefire talks, describing his departure as related to “something much bigger.” Prior to his exit, G7 leaders issued a statement urging a de-escalation of the conflict but reaffirmed support for Israel, condemning Iran as a destabilizing force in the region.

Focus Shifts to U.S. Retail Sales

Investors await the release of U.S. retail sales figures for May, with economists forecasting a 0.5% decline month-over-month following a 0.1% gain in April. Despite concerns over tariffs, consumer sentiment in the U.S. improved in June—the first increase in six months—due in part to hopes for easing trade tensions with China. However, rising geopolitical risks and potential spikes in oil prices could threaten this fragile optimism.

Bank of Japan Slows Bond Purchase Tapering

The Bank of Japan kept interest rates steady at 0.5% as expected and announced plans to slow its tapering of monthly bond purchases starting April 2026, reducing the pace from 400 billion yen to 200 billion yen per quarter. This cautious approach aims to balance economic support while minimizing market disruption amid challenges posed by U.S. trade tariffs.

The BOJ’s decision comes ahead of several key central bank meetings this week, including the U.S. Federal Reserve’s policy announcement on Wednesday.

European equity markets dropped sharply Tuesday, rattled by escalating violence between Israel and Iran just as the Federal Reserve commenced its two-day policy meeting.

By 03:05 ET, Germany’s DAX had fallen 1%, France’s CAC 40 slipped 0.8%, and the UK’s FTSE 100 was down 0.5%, reflecting growing investor anxiety over the conflict’s potential to destabilize global markets.

Israel-Iran Conflict Deepens Investor Caution

The ongoing hostilities between Israel and Iran, now entering their fifth day, have cast a shadow over market sentiment. U.S. President Donald Trump intensified concerns by urging Iranian civilians to evacuate Tehran and abruptly ending his attendance at the Group of Seven summit. However, White House officials quickly reassured that the U.S. does not intend to directly engage in the conflict.

Meanwhile, Defense Secretary Pete Hegseth told Fox News that while Trump seeks a diplomatic deal with Iran over its nuclear program, the U.S. remains committed to protecting its regional assets.

G7 Nations Stand Behind Israel

The G7 group, comprising leading industrial nations, issued a statement supporting Israel and identifying Iran as a destabilizing force in the Middle East. Amid these tensions, Trump and UK Prime Minister Keir Starmer announced the finalization of a trade deal between the U.S. and the UK, covering sectors such as automotive tariffs and aerospace, though detailed terms were not disclosed.

Federal Reserve Meeting in Focus

Investors are keenly watching the Federal Reserve’s policy meeting, where rates are widely expected to remain steady at 4.25%–4.50%. Market participants hope for guidance on whether rate cuts could be forthcoming or if ongoing trade uncertainties under the Trump administration will keep policy on hold.

Earlier Tuesday, the Bank of Japan maintained interest rates and pledged to continue government bond purchases over the next two years, albeit at a slower tapering pace starting in 2026. Other central banks, including the Bank of England, Norges Bank, Riksbank, and Swiss National Bank, also have policy decisions slated this week.

Renault Faces Leadership Shake-Up

Corporate news highlights include Renault’s search for a new CEO following Luca de Meo’s unexpected resignation. Renault shares plunged as much as 8% on Monday—their steepest one-day fall since February 2022. Industry insiders speculate that Denis Le Vot, a veteran Renault executive, or Maxime Picat of Stellantis could be frontrunners for the role.

Oil Prices Stabilize Amid Conflict

Oil markets steadied Tuesday after earlier volatility triggered by concerns about Middle East supply disruptions. At 03:05 ET, Brent crude futures rose slightly by 0.1% to $73.27 per barrel, while U.S. West Texas Intermediate futures also gained 0.1% to $70.30 per barrel. Prices had dropped over 1% Monday on hopes for de-escalation, but surged again after Trump’s call for Tehran’s evacuation.

Shares of solar and renewable energy companies in the U.S. and Europe fell sharply Tuesday following a Senate Republican bill that would accelerate the phase-out of tax credits for wind and solar projects, disappointing clean energy supporters who had hoped for more generous relief than the House’s earlier cuts.

In U.S. markets, Sunrun (NASDAQ:RUN) plunged nearly 25% in premarket trading, while SolarEdge Technologies (NASDAQ:SEDG) and Enphase Energy (NASDAQ:ENPH) dropped around 20% and 15%, respectively. European renewable names also declined, with Orsted (LSE:10CF) down 1.2%, Nordex (TG:NDX1) slipping about 1%, and RWE (TG:RWE) losing 1.3%.

The Senate’s plan removes a strict 60-day construction start requirement but still calls for wind and solar tax credits to end in 2028. In contrast, incentives for nuclear, hydropower, and geothermal energy would remain available until a phased termination in 2036.

This legislation is part of President Donald Trump’s broader economic agenda, which rolls back several provisions of the Inflation Reduction Act. Notably, the $7,500 electric vehicle tax credit would be eliminated 180 days after the bill’s enactment, rather than waiting until year-end as the House version stipulates.

The Senate bill also eliminates the hydrogen production tax credit—valued at up to $3 per kilogram—despite heavy lobbying by companies like Plug Power (NASDAQ:PLUG) and various industry groups.

Additionally, the proposal removes incentives for both leased and owned rooftop solar installations, a change that experts warn could inflict serious harm on the already struggling solar market. This ongoing policy uncertainty has contributed to the bankruptcy of Solar Mosaic, a prominent home solar financing firm.

Unlike the House proposal, the Senate bill preserves nuclear energy tax credits by removing an impractical 2028 construction deadline.

Lawmakers aim to pass the Senate version and send it back to the House for final approval before the July 4 recess, though amendments may still occur.

European oil shares climbed on Tuesday, buoyed by a rise in crude prices as the conflict between Israel and Iran extended into its fifth day.

Major energy firms such as Shell (LSE:SHEL), BP (LSE:BP.), Galp Energia (EU:GALP), TotalEnergies (EU:TTE), Repsol (BIT:1REP), and Equinor (NYSE:EQNR) saw gains in their stock prices.

On the ground, Israel’s military announced multiple extensive strikes targeting missile storage facilities and launch sites in western Iran. Israel’s Air Force also claimed responsibility for the overnight killing of a high-ranking Iranian general in Tehran, although Iranian authorities have yet to confirm this.

Meanwhile, discussions are underway in Washington regarding the possibility of nuclear negotiations between the U.S. and Iran. Reports from Axios indicate that U.S. envoy Steve Witkoff and Iranian Foreign Minister Abbas Araghchi could meet soon, aiming to de-escalate tensions and revive nuclear deal talks.

Though the talks are not finalized, this signals a renewed push by U.S. President Donald Trump to reduce hostilities between the two nations and refocus efforts on diplomatic solutions.

Media reports suggest Iran is willing to enter negotiations if Israel halts its bombing campaign.

Trump has maintained a firm stance on Iran, urging all personnel to evacuate Tehran immediately and criticizing Iran’s rejection of a prior nuclear agreement. The president has consistently opposed Iran’s uranium enrichment efforts, despite Tehran’s claims that it does not seek nuclear weapons.

Oil prices have seen significant fluctuations recently as markets weigh the potential disruption to Middle Eastern oil routes caused by the escalating conflict. On Tuesday, crude prices edged higher amid these geopolitical concerns.

British outsourcing company Capita plc (LSE:CPI) on Tuesday maintained its full-year guidance despite reporting a 4.5% revenue decline in the first five months of 2025.

The company expects broadly flat revenues for the full year with a small increase in operating margin and a free cash flow outflow of £45-65 million, according to a trading update.

Capita’s performance is expected to be weighted toward the second half of the year, particularly given the known headwinds in its Contact Centre business, which saw a 21% revenue drop in the first half.

The company also faces timing challenges between cost savings and increased expenses from pay reviews and additional National Insurance Contributions.

Despite these challenges, contract awards have been strong with Total Contract Value (TCV) up 24% to £969 million compared to the same period last year. Year-to-date TCV won in Capita Public Service increased by over 70%, offsetting a 49% reduction in the Contact Centre business.

Across business segments, Capita Public Services revenue grew 2.3%, while Regulated Services increased 6.4%, benefiting from a one-off termination exit fee and deferred income release from a contract in the Mortgage Software business.

Pension Solutions revenue declined 1% as the completion of short-term contracts offset new wins.

The company has achieved £185 million in annualized cost savings and remains on track to deliver its target of £250 million in annualized savings by December 2025.

Capita continues to expect positive free cash flow from the end of 2025 and maintains confidence in delivering its medium-term margin guidance of 6-8%.

The company is also making strategic progress in embedding technology, including transformative AI solutions to drive efficiency, with more details expected in its upcoming H1 results.

British shares opened in the red on Tuesday as tensions in the Middle East escalated, following Israel’s announcement of the killing of Iran’s armed forces chief of staff.

By 07:26 GMT, the FTSE 100 index had declined 0.7%, while the British pound slipped 0.2% against the US dollar, trading just above 1.35. European markets also felt the impact, with Germany’s DAX dropping 1.5% and France’s CAC 40 down 1.1%.

Corporate Updates:

• Ashtead Group PLC (LSE:AHT) forecasted rental revenue growth for the year to be between flat and 4%, citing ongoing weakness in the U.S. commercial construction sector as a headwind.
• Legal & General Group PLC (LSE:LGEN) confirmed its 2025 group core operating profit growth guidance of 6% to 9%, consistent with its longer-term targets extending through 2028.
• ASOS PLC (LSE:ASOS) announced the appointment of Aaron Izzard as its new Chief Financial Officer. Izzard, currently the company’s director of group finance, will succeed Dave Murray, who is stepping down on June 30 to pursue new opportunities.
• Morgan Sindall Group PLC (LSE:MGNS) raised its annual pre-tax profit outlook, attributing the boost to robust growth in its construction and fit-out businesses.

Gold prices remained steady in Asian trading Tuesday, holding below the $3,400 per ounce mark as traders digested mixed signals around the Israel-Iran conflict and awaited clarity on U.S. Federal Reserve policy.

Spot gold inched up 0.2% to $3,392.25 an ounce, while August gold futures edged down 0.2% to $3,410.70 by 01:12 ET (05:12 GMT). The metal had surged past $3,450 on Monday before retreating sharply amid reports of potential ceasefire talks.

Geopolitical Tensions Offer Support, But Uncertainty Lingers

Volatility in bullion markets was driven by conflicting developments in the Middle East. While initial reports suggested Iran might be open to a ceasefire, Tehran later rejected any truce while under Israeli fire. Heightening tensions, U.S. President Donald Trump warned that “everyone should immediately evacuate Tehran,” sparking fears of deeper U.S. involvement.

Despite Trump’s warnings, White House officials clarified that the U.S. does not plan to intervene militarily. However, according to Axios, U.S. and Iranian officials are quietly exploring renewed dialogue on both a ceasefire and Iran’s nuclear program. No formal meeting date has been confirmed.

Market Outlook Turns Cautious

Gold’s rally has lost steam amid the uncertainty. Analysts at Citi warned that prices could slip below $3,000 per ounce in the coming quarters as safe-haven demand wanes and investor interest begins to fade.

Fed Decision Looms Over Broader Metals Market

The broader metals complex remained under pressure ahead of the Federal Reserve’s upcoming policy announcement on Wednesday. While no rate changes are expected, markets are watching closely for forward guidance from Fed Chair Jerome Powell.

In other metals trading:

• Platinum futures dipped 0.1% to $1,239.90/oz, continuing a modest pullback after recent strong gains.
• Silver futures rose 0.2% to $36.503/oz.
• Copper prices also softened, with London futures down 0.4% to $9,674.75 per ton and U.S. contracts holding steady at $4.8163 per pound.

A softer dollar provided little support to metals, as traders remained cautious ahead of the Fed’s decision and the ongoing geopolitical uncertainty in the Middle East.

Following the UK’s Strategic Defence Review 2025, RC Fornax PLC (LSE:RCFX) has provided a trading update highlighting increased engagement with potential customers and promising partnership opportunities. Despite this positive momentum, the company anticipates short-term challenges as delayed customer spending and slower-than-expected contract conversions are expected to result in full-year 2025 revenues falling below market forecasts.

To address these issues and position the business for future growth, RC Fornax has undertaken organizational changes, including appointing a new Sales Director and restructuring internal teams to better align with market demands. While near-term performance faces pressure, the company remains confident in its longer-term outlook, bolstered by strategic hires and strengthened client relationships.

About RC Fornax PLC

RC Fornax PLC, listed on the AIM market, specializes in delivering outcome-based engineering solutions tailored to the UK defence sector. Founded in 2021 by RAF veterans Paul Reeves and Daniel Clark, the company is dedicated to enhancing project efficiency and delivering cost-effective value within defence programs.