Global shares decline as tensions simmer in the Middle East
[June 19, 2025] By
YURI KAGEYAMA
TOKYO (AP) — Global shares retreated Thursday as worries persisted about
conflict in the Middle East.
On the seventh day of a conflict that began with a surprise wave of
Israeli airstrikes targeting military sites, senior officers and nuclear
scientists, Iranian state media reported that Iran’s foreign minister
planned to meet with his European counterparts in Geneva.
Meanwhile, Israel carried out strikes on Iran’s Arak heavy water
reactor, in its latest attack on Iran's sprawling nuclear program.
The escalating warfare has shaken financial markets.
France's CAC 40 slipped 0.8% in early trading to 7,593.06. In Germany,
the DAX fell 0.9% to 23,141.82. Britain's FTSE 100 lost 0.5% to
8,797.24. The futures for the S&P 500 and the Dow Jones Industrial
Average were 0.4% lower.
The Federal Reserve opted Wednesday to keep its key interest rate
unchanged, while its policymakers signaled they still expect to cut
rates twice this year. They project that President Donald Trump’s higher
import duties will fuel inflation. They also expect growth to slow and
unemployment to edge higher.
The Bank of England likewise was expected to keep its key interest rate
unchanged at 4.25% at its meeting Thursday, after cutting it twice this
year.
Switzerland’s central bank cut its target interest rate by a quarter of
a percentage point to zero on Thursday, saying that inflationary
pressures have eased. It is among many central banks opting to go ahead
and ease the cost of borrowing as uncertainty over Trump's tariffs and
geopolitical crises threaten global growth.
In Asian trading, Japan's benchmark Nikkei 225 shed 1.0% to finish at
38,488.34. Shares in Japan’s Nippon Steel Corp. jumped 2.3% after it
announced that its acquisition of U.S. Steel, which met U.S. government
opposition for more than a year, was finally completed.
Hong Kong’s Hang Seng dropped 2.0% to 23,237.74 on heavy selling of
tech-related shares, while the Shanghai Composite lost 0.8% to 3,362.11.
Australia's S&P/ASX 200 was little changed at 8,523.70 and in South
Korea, the Kospi rose 0.2% to 2,977.74.
U.S. financial markets will be closed Thursday for the Juneteenth
holiday.
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A dealer walks past near the screens showing the Korea Composite
Stock Price Index (KOSPI), left, and the foreign exchange rate
between U.S. dollar and South Korean won at a dealing room of Hana
Bank in Seoul, South Korea, Thursday, June 19, 2025. (AP Photo/Lee
Jin-man)
 So far, U.S. inflation has remained
relatively tame, and it’s near the Fed’s target of 2%. But
economists have been warning it may take months to feel the effects
of tariffs. And inflation has been feeling upward pressure recently
from a spurt in oil prices because of Israel’s fighting with Iran.
Fed officials are waiting to see how big Trump’s tariffs will
ultimately be, what they will affect and whether they will drive a
one-time increase to inflation or something more dangerous. There is
also still deep uncertainty about how much tariffs will grind down
on the economy’s growth.
“Because the economy is still solid, we can take the time to
actually see what’s going to happen,” said Fed Chair Jerome Powell.
“We’ll make smarter and better decisions if we just wait a couple
months or however long it takes to get a sense of really what is
going to be the passthrough of inflation and what are going to be
the effects on spending and hiring and all those things,” he said.
A report released Wednesday said fewer workers applied for
unemployment benefits last week, possibly indicating fewer layoffs.
But another said homebuilders broke ground on fewer homes last month
than economists expected. That suggests higher mortgage rates may be
casting a chill on the industry.
In other dealings early Thursday, benchmark U.S. crude rose 13 cents
to $73.63. Brent crude, the international standard, advanced 7 cents
to $76.77 a barrel.
Oil prices have been yo-yoing as fears rise and ebb that the
conflict between Israel and Iran could disrupt the global flow of
crude. Iran is a major producer of oil and also sits on the narrow
Strait of Hormuz, through which much of the world’s crude passes.
In currency trading, the U.S. dollar rose to 145.46 Japanese yen
from 145.13 yen. The euro cost $1.1476, down from $1.1484.
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