The US dollar index fell below 97.9 points on Tuesday, hitting its lowest level in over three years, as uninterrupted oil flows through the Middle East eased inflation concerns and bolstered expectations of multiple US Federal Reserve rate cuts this year. A more favourable inflation outlook has strengthened the case for two rate reductions by the Fed before year-end. Speaking separately, Fed Chair Jerome Powell noted that concerns over tariff-driven inflation had contributed to the central bank’s recent decision to keep rates on hold. However, he suggested that if trade tensions ease, particularly if President Donald Trump revises tariff policy ahead of the 9 July deadline, it could create scope for monetary easing in the coming months. The US 10-year Treasury yield slipped to 4.31%, its lowest in seven weeks, while Fed officials Waller and Bowman also signalled that rate cuts may be on the horizon. On Wall Street, the S&P 500 edged up nearly 1% to close at 6 084.38, while the Nasdaq gained 1.29% and the Dow Jones Futures climbed by 1.01%, ending at 43 336.00.

European equities surged, sustained by positive momentum in global markets as tensions in the Middle East eased and key energy prices retreated. The STOXX 50 climbed 1.50% to finish at 5 297, while the broader STOXX Europe 600 gained 1.10% and Germany’s DAX closed at 23 644.21 (its highest since mid‑June 2025. Continued passage of oil and LNG tankers through the Strait of Hormuz helped push energy prices lower, easing inflation pressures for European energy importers. Attention now shifts to the NATO summit in The Hague, where leaders are expected to commit to increased defence spending, providing further support to defence stocks that have been among this year’s top performers in Europe. Banking and technology shares also advanced, with UniCredit, ASML, and Adyen each rising more than 3%. 

The FTSE 100 closed at 8 758.99, while the pound climbed above $1.361, near its strongest level since January 2022, on expectations of US Federal Reserve rate cuts, easing geopolitical tensions and relief to inflation from lower oil prices. Airline stocks boomed, with EasyJet and IAG rallying over 6% as Gulf airspace reopened. 

The South African rand appreciated to around 17.80 against the US dollar, its strongest level since mid-June, supported by a softer dollar and improved global risk appetite. On the economic front, South Africa’s composite leading business cycle indicator declined by 0.30% month-on-month in April 2025. The drop reflected weakness in seven out of 10 underlying components, with the most significant negative influences coming from a slowdown in the six-month smoothed growth rate of the real M1 money supply and reduced domestic manufacturing orders. 

Asian markets closed higher on Tuesday, buoyed by easing energy prices and improved risk appetite amid signs of de-escalation in the Middle East and growing expectations of looser monetary policy from major central banks. Japan’s Nikkei 225 rose 1.14% to close at 38 790.56, driven by gains in industrial and technology stocks. The Shanghai Composite added 1.13%, supported by continued policy backing and tentative signs of stabilisation in China’s property sector. The Hang Seng Index outperformed, climbing 2% as technology and consumer shares rallied. Chinese investors also focused on a key legislative meeting in Beijing, where policymakers are reviewing proposed amendments to the anti-unfair competition law, with an emphasis on cyberspace regulation. The session reflects Beijing’s renewed focus on economic stability and reinforcing market discipline.

Commodities declined, with Brent crude futures falling 4.85% to $68.01 per barrel, extending losses from the previous session and dipping below levels last seen in mid-June. The International Energy Agency sought to calm markets by noting it holds 1.2 billion barrels in emergency reserves, which could be released if required. Additionally, several OPEC+ producers have already started increasing output and hold spare capacity that could be brought online to support global supply. Gold also retreated, dropping 2.24% to trade at $3 312.39 per ounce.