Geopolitical tensions are creating significant market uncertainty, with a two-week deferral from President Trump on potential U.S. military action against Iran causing considerable investor unease. The conflict has driven Brent crude futures up 11 percent to USD 77.01 a barrel amid fears of supply disruption through the Strait of Hormuz. The U.S. dollar is strengthening as a short-term safe haven, though long-run prospects are questioned. Concurrently, doubts about American reliability are prompting allies to reconsider their dependence on the U.S. nuclear umbrella. The Federal Reserve is holding interest rates steady but projects two cuts in 2025, contingent on inflation, with Chairman Powell's upcoming congressional testimony being a key watchpoint. Trade frictions are escalating as the U.S. considers revoking technology waivers for allies' chip factories in China, while Chinese exports of rare-earth magnets plunged 74 percent in May following new export controls.

Major U.S. indices are trading sideways as markets digest high policy uncertainty, with the Dow Jones Industrial Average and S&P 500 remaining relatively flat. Despite volatility, diversified, multi-asset portfolios are outperforming concentrated bets, delivering their strongest first-half performance in years and highlighting the resilience of the classic 60 stroke 40 stock-bond mix.

Sector-level performance is highly varied. Solar stocks and clean energy ETFs fell sharply after a Senate tax proposal revealed more aggressive cuts to government support than expected, though the legislation may benefit nuclear power and battery storage. In healthcare, the surge in anti-obesity drugs is creating a USD 36 billion trade imbalance with Ireland and is now being advocated by a major cardiology group as a primary preventative measure against heart disease. The technology sector is seeing Foxconn and Nvidia explore the use of humanoid robots in AI server manufacturing. Real Estate Investment Trusts show potential as a contrarian play with compelling valuations after five years of underperformance, while the U.S. office market is seeing supply decline for the first time in a quarter-century. The outlook for stablecoins has improved following supportive regulatory action in the Senate. In the automotive sector, the average annual cost of vehicle ownership has climbed to USD 12,296, impacting demand from younger consumers.

Company-specific activity reflects these broader trends. Kroger was the week's top S&P 500 gainer at plus 9.4 percent, while Accenture was the largest decliner at minus 6.9 percent. Palantir's stock is up 80 percent in 2025 but faces growing reputational risks related to data privacy. Key earnings reports from FedEx, Micron Technology, and Nike are anticipated next week.