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Markets grappled with a flurry of geopolitical and corporate developments. Oil dropped over 6% as ceasefire hopes between Iran and Israel lowered supply disruption risks. Meanwhile, China accelerated its de-dollarization agenda, expanding yuan-based financial tools as dollar sentiment weakens. In earnings, FedEx and Carnival beat expectations, with the latter raising its outlook. Chipmaker Ambarella surged 20% on sale rumors. However, risk remains high at sea – maritime insurers have begun denying coverage for U.S., Israeli and U.K.-linked ships in the Middle East. Investors now weigh solid corporate performance against fragile geopolitical stability and structural shifts in global finance.

Oil Slides 6% as Ceasefire Eases Supply Fears

Oil prices dropped for a second straight day, with WTI settling at $64.37 and Brent at $67.14, as investors bet on the durability of a ceasefire between Israel and Iran. The sharp decline follows Iran’s limited retaliation after U.S. airstrikes on its nuclear sites, with no damage to energy infrastructure. President Trump stated that China could continue purchasing Iranian oil – later clarified by the White House as not lifting sanctions, but referencing the Strait of Hormuz stability. The ceasefire appears to have reduced fears of a major supply disruption, pulling prices back to levels seen before the June 13 conflict escalation.

Investment Insight:

The market is signaling confidence that the geopolitical risk premium tied to the Iran/Israel conflict is dissipating. With oil now trading below $65, investors may shift focus back to fundamentals such as global demand recovery, U.S. inventory data and OPEC+ policy. However, the ceasefire remains fragile and any sign of renewed hostilities – especially near the Strait of Hormuz – could trigger rapid volatility. Energy investors should watch for potential short-covering rallies or policy shifts, especially involving China’s oil imports and any White House backpedaling on sanctions enforcement. For now, energy stocks may face short-term pressure as risk unwinds.

China Pushes Yuan Forward as Dollar Weakens

China is intensifying its efforts to internationalize the yuan as the U.S. dollar faces weakening global confidence. Beijing has expanded foreign investor access to domestic futures and options, launched digital yuan initiatives and encouraged yuan-based trade settlements and lending. While the yuan only accounted for 2.89% of global payments in May, recent policy moves aim to position it as a credible alternative to the dollar, particularly in Asia. However, concerns over transparency and rule of law remain barriers. The U.S. dollar still dominates global payments, but Beijing’s strategy signals a structural push toward de-dollarization and financial autonomy.

Investment Insight:

Investors should monitor the yuan’s evolving role in global finance, especially as geopolitical instability and U.S. policy uncertainty fuel dollar volatility. While China’s capital controls and regulatory opacity still limit its appeal, incremental reforms – including expanded market access and cross-border lending in yuan – suggest long-term ambitions for currency diversification. Rising institutional flows into CNY assets, as noted by State Street, could foreshadow a gradual shift in asset allocation strategies. For portfolio hedging, this trend merits closer attention – particularly for those exposed to U.S. assets, emerging markets or dollar-dependent commodities. Stay alert for FX policy signals from both Washington and Beijing.