Oil surges as Trump says Iran ceasefire may be over

Oil prices surged and Wall Street was broadly weaker after US President Donald Trump said the ceasefire with Iran might be over, warning further strikes might be on the way although he played down the prospect of a return to a full-blown war.

Minutes to the last Federal Reserve policy meeting showed decisionmakers largely agreed higher rates would be needed if inflation remained elevated, while the International Monetary Fund lifted its inflation outlook, saying nations weathered the Middle East conflict better than expected and noting a re-escalation was the biggest imminent risk.

US semiconductor and chip firms were broadly stronger in the subdued trading session after Apple said it plans to spend more than US$30 billion on US-made chips from Broadcom, and Nvidia was reportedly cleared to sell artificial intelligence chips to certain Chinese companies.

And SpaceX extended its decline in its second day on the Nasdaq 100, remaining below its US$150 initial public offering price.

Bubbling tensions

Brent crude oil futures jumped 5.4% to US$78.19 a barrel at 7am in Auckland, as US President Trump ratcheted up his rhetoric about Iran following the latest flurry of strikes in the Middle East, saying another attack was probably on the way and that the ceasefire might be over.

And while he played down the prospect of resuming full-blown hostilities, he said the US might reinstate the naval blockade on Iran’s ports.

“Renewed geopolitical tensions and higher oil prices dominated trading after President Trump declared the ceasefire with Iran was effectively over,” Moomoo market strategy consultant Greg Boland said in a note. “The Federal Reserve's June meeting minutes also reinforced that policymakers remain divided, with several members still seeing a case for further rate hikes should inflation remain elevated.”

The heightened tensions weighed on US and European stock markets, with the Dow Jones Industrial Average falling 1.1% in late trading, with American Express, Sherwin-Williams and Boeing at the bottom of the leaderboard. Energy producers such as Chevron were generally stronger on the rising oil prices.

The rising fuel prices weighed on carriers such as American Airlines, and set a soft lead for the likes of Air New Zealand and Qantas Airways when trading opens in New Zealand and Australia.

Hungry for chips

The tech-heavy Nasdaq Composite was only marginally weaker, with chipmakers and semiconductor firms rallying on Apple’s plans to buy chips from Broadcom and after The Information reported Chinese officials would give some companies permission to buy a limited amount of Nvidia’s H200 chips.

Meanwhile, SpaceX dropped 2.5% to US$145.67 in its second day on the Nasdaq 100 and announced a new Grok AI model in partnership with Cursor to support finance, legal and coding tasks. Local space favourite Rocket Lab was down 0.3% in late trading.

The kiwi dollar traded at 57.09 US cents at 7am from 57.14 cents after minutes to the Fed’s latest policy review showed the governors broadly agreed that rates would need to rise if inflation remained elevated, but could stay on hold if those pressures abated.

Separately, the IMF lifted its forecast for global inflation, predicting a peak of 4.7% this year, before easing to 3.9% in 2027, crimping growth at the edges. The fund’s outlook warned the biggest near-term risk was a re-escalation of hostilities in the Middle East, which could exacerbate supply shortages and drive up commodity prices.

European stock markets declined in the subdued tone, with the UK’s FTSE 100 down 1.7% and Germany’s DAX and France’s CAC 40 both sliding 2.2%. Spain’s IBEX dropped 2.7% after Trump said he’d told Treasury secretary Scott Bessent to cut all trade with Spain over its low level of defence spending at the Nato summit.

The US president also told Ukraine President Volodymyr Zelenskyy that the US would let the Eastern European country manufacture Patriot air defence systems to protect itself from Russian missiles.

The downbeat tone is set to continue through to the antipodes, with Australian futures pointing to a 0.5% decline for the S&P/ASX 200 index when trading opens across the Tasman. New Zealand’s S&P/NZX 50 index has gained 0.3% so far this week, with Friday closed for the Matariki holiday.

The BusinessNZ-BNZ performance of manufacturing index is on the local data radar today.

Reporting by Paul McBeth. Image from Timothy Newman on Unsplash.