Key Summary

US stocks reverse sharply as Middle East tensions erase early rally CBS News: Nearly 100 U.S. Troops injured in Iranian attacks. Most return to duty Axios: Trump is focusing on making Iran pay for violations of MOU and recent US deaths Crude oil future settle at $82.48 UK names John Healey Chancellor of the Exchequer Trump: Iran will pay for killing American soldiers many times over European markets close: Stocks finish mixed as traders assess new UK leadership US yields are pushing to new highs and along with it the US dollar US leading index for June -0.2% versus -0.1% estimate Canada June CPI YoY 2.8% vs 2.9% estimate The USD is mixed to kickstart the North American session investingLive European markets wrap: Oil retreats, equities bounce as Iran touches on mediation proposals Mediators have proposed a 10-day cessation of strikes to find ways to revive the US-Iran deal US stocks began the week on a positive note, but investors became increasingly cautious as the trading session progressed. Optimism from early gains faded after reports pointed to rising U.S. military activity in the Middle East, fueling concerns that the conflict involving Iran could broaden. Those headlines helped lift oil prices, pushed Treasury yields higher, and prompted investors to reduce risk late in the U.S. session. In Canada, inflation data painted more favorable picture. Headline CPI continued to moderate on an annual basis, suggesting overall inflation pressures are easing. However, travel-related categories surged as demand surrounding the FIFA World Cup boosted prices for hotels, airfares, rental vehicles, and travel packages. Looking at the numbers, Canada’s June CPI rose 2.8% y/y, just below the 2.9% estimate and down from 3.2% in May. Prices fell 0.4% on the month, led by lower gasoline costs, reinforcing the view that inflation pressures are easing. The Canadian dollar weakened following the release, with USDCAD rising 0.35%. The pair moved back above its falling 100-hour moving average at 1.40384 and is trading near session highs around 1.4070. The next key technical target comes in at the falling 200-hour moving average near 1.4094. In the United States, the Conference Board's Leading Economic Index (LEI) declined by 0.2%, slightly weaker than expected, partially reversing gains from the prior two months. Weak consumer expectations and softer building permits weighed on the index, highlighting signs of slowing momentum in the economy. Even so, the Conference Board continues to expect the U.S. economy to expand in 2026, supported by strong business investment tied to artificial intelligence and gradually improving inflation trends. European equities finished the day mixed, supported by early optimism over global growth prospects and hopes that diplomatic efforts in the Middle East could prevent a broader regional conflict. German DAX rose 30.67 points or 0.12% to 24,861.66. French CAC 40 rose 1.30 points or 0.02% to 8,340.12. UK's FTSE 100 fell 75.63 points or -0.71% to 10,524.75. Italy's FTSE MIB fell 19.49 points or -0.04% to 51,862.78. Spain's IBEX fell 10.02 points or -0.05% to 19,206.89. On Wall Street, the major indices followed a very different path. Stocks opened sharply higher, with the Dow Jones Industrial Average up as much as 268 points, the S&P 500 higher by 55.53 points, and the Nasdaq Composite gaining 295.56 points at session highs. However, buyers gradually lost control as geopolitical concerns intensified throughout the afternoon. Rising Treasury yields and higher energy prices added to the pressure, leaving the Dow and S&P 500 in negative territory by the close while the Nasdaq surrendered most of its earlier advance. Early reports of a possible cease-fire and reopening of the Strait of Hormuz briefly pressured prices lower, but renewed concerns over expanding military activity and the potential for supply disruptions ultimately drove oil back toward its highs. The Middle East remained the dominant macro story. Reports that the United States is increasing its military presence in Israel—including additional aerial refueling aircraft and logistical support—heightened fears that the conflict with Iran could broaden despite ongoing diplomatic efforts. The renewed uncertainty kept energy markets on edge and ultimately became the catalyst that erased much of the day's earlier optimism in global equity markets. Treasury yields moved higher across the curve, reflecting renewed concerns about inflation (higher oil) and reduced expectations for near-term Fed easing. 2-Year:4.2106% (+3.9 bps) 5-Year:4.3230% (+5.0 bps) 10-Year:4.5937% (+5.3 bps) 30-Year:5.1145% (+5.1 bps) Bottom Line: The day began with optimism fueled by improving inflation trends and resilient global equities, but ended with investors once again focused on geopolitical risk. Rising oil prices, higher Treasury yields, and concerns over the Middle East shifted the market narrative from "risk-on" to caution, leaving traders looking to incoming geopolitical headlines for the next directional catalyst. This article was written by Greg Michalowski at investinglive.com.