Let's greet Juneteenth with a market rally

Investors continue to move with the flow of geopolitical anxiety – but this flow is not a broad, straight river with a clear direction. It is more like a narrow, churning stream, tossing the investment boat from side to side. One day it veers one way, the next day – the other.

Tuesday was marked by nervous anticipation of something terrible potentially unfolding in the Middle East. Fortunately, nothing happened – yet. Trading took place amid clear tension and brought little reward to investors.

The main session opened in negative territory, but a faint hope emerged that market participants might be able to pull the indexes out of the dip. By midday, they had almost returned to neutral, and for a brief moment the blue-chip Dow Jones (DJIA-30) even moved into positive territory. But that moment was fleeting and ultimately led nowhere.

Sentiment then deteriorated once more, and the second half of the day was dictated by the bears. They didn’t manage any major victories, but they did succeed in keeping the indexes firmly in the red. As a result, all major U.S. indexes closed with losses: the Dow Jones fell by 0.70%, the tech-heavy NASDAQ Composite dropped by 0.91%, and the benchmark S&P 500 ended the day down 0.84%.

Market activity remained muted – it seems many investors chose to step aside during these uncertain times. Although the sell-off was relatively moderate, it affected nearly all sectors of the economy, except for energy stocks, which ended the day with an average gain of 0.92% due to another spike in oil prices. The worst performance came from healthcare and pharmaceutical stocks, which saw average losses of over 1.5% (-1.64%).

The ITS index family was also affected by the sell-off on the U.S. market. The ITS World Index (ITSW), which tracks global companies, fell by 0.91%. The ITS Shariah Index (ITSS), which tracks Shariah-compliant securities, lost even more – down 1.18%.

Top performers in both indexes were oil giants Chevron (CVX) and Exxon Mobil (XOM), which gained 1.93% and 1.35% respectively. Meanwhile, healthcare stocks dragged the indexes down, particularly shares of pharmaceutical heavyweight Eli Lilly & Co (LLY), which came under heavy pressure following news of its planned $3.1 billion acquisition of Verve Therapeutics (VERV). Unsurprisingly, the scale of the deal unsettled many investors, and LLY ended the day down 2.02%.

In summary, the market remains in a highly tense state. On the surface, things may appear calm – but that is just an illusion. Even the VIX fear index suggests otherwise, closing above the 20-point mark (21.3) for the first time since 23 May. In the current climate, one thing is clear: caution is essential.

 

 

Market outlook for 18 June 2025

The market is frozen in anticipation of major developments. Chief among investors’ concerns is the ongoing situation in the Middle East, which continues to cause anxiety. Adding to this today is the awaited decision by the U.S. Federal Reserve on interest rates, following the latest FOMC meeting. While the rate outcome is largely clear – with CME’s FedWatch futures pricing in nearly a 100% chance of no change – the Middle East has kept markets on edge for six days straight, and there is little sign of clarity or calm in the near future.

As a result, investors in both Europe and the U.S. are hesitant to take firm positions and prefer to keep activity to a minimum. Unsurprisingly, leading indexes are fluctuating around the flatline – slightly above or below, depending on the market. At least until 23:00 Astana time, when the Fed announces its decision, no significant market moves are expected. Unless, of course, something flares up again in the Middle East. For now, investors can only watch the situation unfold with caution.

Asia shows a slightly more upbeat picture – although it remains far from straightforward. The most optimism today is in Japan, where the Nikkei 225 has climbed back to mid-February levels, the very point from which the recent global market correction began. The rally was sparked by the Bank of Japan’s decision to keep interest rates unchanged at 0.5%.

In contrast, China and Hong Kong are heading in the opposite direction. Last week, the Hang Seng index hit a local high, but was soon overtaken by a wave of selling, dropping more than 3% in the days that followed. The decline continued today, with the index down another 1.12%.

In the U.S., markets are making a modest attempt to rise in early trading. The effort is, to put it mildly, not particularly strong – but futures on major American indexes are nevertheless up a few tenths of a percent. One additional factor worth keeping in mind: tomorrow is a public holiday in the U.S., as the country celebrates Juneteenth.

And Americans, as we know, have a habit of entering holidays in a good mood. So there is hope that market participants will at least try to keep prices from falling too far – and perhaps even give them a gentle lift. Still, no one should expect a meaningful rally: there is no clear narrative or driving force for further growth at the moment. The main task now is simply to hold the line. Nothing more.