- US President Trump has once again issued a stern warning regarding Iran, stating that if he is not satisfied with the content of the impending US-Iran agreement, he will resume military action. This has reignited geopolitical uncertainty in the Middle East, causing international crude oil prices to end their previous decline and rebound.
- The new Federal Reserve Chairman, Warsh, is about to preside over his first monetary policy meeting since taking office. The market generally expects the federal funds rate to remain unchanged in the range of 3.50% to 3.75%, but traders are closely watching for adjustments in the dovish language of the policy statement and the guidance on future rate paths in the dot plot.
- Amid the intertwining of global macro policies and geopolitical risks, global financial markets are experiencing significant volatility. The Dow Jones Industrial Average rose more than 250 points during the session, reaching a new all-time high for the third consecutive trading day, while the cryptocurrency market is under pressure at key resistance levels.
Warsh's Policy Debut Triggers Reassessment of Monetary Policy Path
The Federal Reserve will announce its latest interest rate decision early Thursday morning. As the first monetary policy meeting chaired by the new Chairman Warsh, this decision is an important window for the market to observe the Fed's future direction. The market generally expects the benchmark rate to remain unchanged in the range of 3.50% to 3.75%. Investors are primarily focused on whether the policy statement will remove the dovish language used since 2024. Removing this language could satisfy internal hawkish demands and be seen as institutional reform rather than a simple hawkish shift. Additionally, this meeting will release quarterly rate forecasts, with the market focusing on whether any officials predict a rate hike. If core inflation rebounds in the future, the market's pricing for rate cuts may face a comprehensive reassessment.
Geopolitical Risks Reignite, Driving International Crude Oil to Rebound
The energy market is strongly disrupted by geopolitical variables. President Trump stated that the US-Iran memorandum of understanding has not been finalized and threatened to resume military action if the agreement does not satisfy the US. As a result, expectations for increased Middle Eastern oil supply have been suppressed, ending the continuous decline in oil prices. US WTI crude futures rose about 1% and returned above $76 per barrel, while Brent crude approached the $80 mark. Although the International Energy Agency predicts a significant global oil supply surplus by 2027, geopolitical risks continue to provide significant short-term support for oil prices.
Tech Sector Leads Gains, Pushing Dow to New Record High
On the eve of the Federal Reserve's decision, the US stock market performed steadily overall, with the Dow rising more than 250 points during the session, an increase of about 0.5%, continuously setting new record highs. The semiconductor sector became the market focus, with Intel rising about 3% due to the official launch of its most advanced 18A-P process node production, seen as a key development in securing future Apple orders. European lithography giant ASML also rose about 5%, indicating continued optimism in the market for AI and advanced manufacturing supply chains. In contrast, new stock SpaceX saw profit-taking, with its stock price falling about 5%, but its cumulative gain since listing still exceeds 40%, with its market value surpassing Amazon.
Forex Market Maintains Narrow Fluctuations Ahead of Fed Decision
The global forex market is cautious ahead of the key decision, with the dollar index rising slightly as traders generally avoid establishing large directional positions. The euro is stable against the dollar around 1.15, while the pound weakened to around 1.34 against the dollar due to UK May inflation data falling short of expectations. Although the Bank of Japan raised rates to the highest level in 31 years, the yen remains relatively weak, with discussions on official intervention ongoing. If the Federal Reserve conveys a more hawkish stance in the press conference, the dollar index may gain further upward momentum.
