Oil Slides, Chip Stocks Tumble, Dow Hits Fresh Record High

Market Overview

Geopolitical developments and central bank decisions drove overnight markets. Oil prices plunged after the U.S. and Iran reportedly reached a framework agreement on transit through the Strait of Hormuz. President Trump said the strait could fully reopen on Friday, easing supply concerns and erasing much of the Middle East risk premium. WTI crude fell 5.82% to $76.05 per barrel, while Brent crude dropped 5.06% to $78.96, falling below $80 for the first time in more than three months.

U.S. equities saw a rotation out of technology and into financials. The Philadelphia Semiconductor Index sank nearly 6%, with Intel down 8%, AMD down over 7%, Micron falling more than 6%, and Nvidia losing over 2%. The Nasdaq Composite declined 1.15% to 26,376, while the S&P 500 slipped 0.57% to 7,511.

Financial stocks outperformed, led by JPMorgan Chase, which gained nearly 4%. The KBW Bank Index rose 1.6% to a record high, helping lift the Dow Jones Industrial Average 0.64% to a fresh record close of 51,999.

SpaceX extended its post-IPO rally, surging 49% in just three trading sessions and reaching a market capitalization of $2.65 trillion, surpassing Amazon. The company also announced an all-stock acquisition of AI coding platform Cursor, valued at approximately $60 billion.

In Asia, the Bank of Japan raised its benchmark interest rate to 1.0%, the highest level since 1995. The offshore yuan strengthened beyond 6.76 per dollar, reaching its strongest level in three years.

Markets are now focused on the Federal Reserve's policy decision and the first press conference by newly appointed Fed Chair Kevin Warsh.

Key Market ThemesOil Prices Retreat as Middle East Tensions Ease

Crude markets experienced heavy selling after reports that Washington and Tehran had agreed on a framework governing navigation through the Strait of Hormuz. While the agreement helped reduce geopolitical concerns, JPMorgan cautioned that the probability of a final deal remains only 10%, while the likelihood of continued deadlock stands at 70%, suggesting uncertainty remains elevated.

Tech Weakness, Financial Strength

Investors rotated away from technology stocks and into financials. Semiconductor shares led declines across the market, while bank stocks rallied on expectations that higher-for-longer interest rates could support profitability. JPMorgan led gains among financials, helping push the Dow to another record high.

BOJ Tightens, Fed in Focus

The Bank of Japan voted 7-1 to raise rates to 1.0% and signaled that additional tightening remains possible if inflation continues to strengthen. Attention now shifts to the Federal Reserve, where markets broadly expect policymakers to leave rates unchanged and maintain a cautious stance toward future rate cuts.

Market OutlookFed Decision and Warsh's Debut

The Federal Reserve will announce its latest policy decision today, followed by the first press conference led by Fed Chair Kevin Warsh. Investors will closely monitor his comments on inflation, balance sheet policy, and future rate expectations. Any hawkish or dovish surprises could trigger significant moves in the U.S. dollar, Treasury yields, and risk assets.

Can Oil Stabilize？

After a nearly 6% decline, oil markets will focus on the implementation of the U.S.-Iran framework agreement, U.S. EIA inventory data, and the IEA Monthly Oil Market Report. These factors will help determine whether crude prices can find support following the sharp selloff.

Key Events to Watch

14:00 GMT+8

• UK May CPI

• Eurozone May CPI

20:30 GMT+8

• U.S. May Retail Sales

22:30 GMT+8

• U.S. EIA Crude Oil Inventories

• IEA Monthly Oil Market Report

02:00 GMT+8 (Next Day)

• Federal Reserve Interest Rate Decision

• Fed Chair Kevin Warsh's First Press Conference

June 17-18

• 2026 Lujiazui Forum