The war, now Israel-Iran, with successive strikes that lead to a further escalation daily, combined with earlier developments in the Middle East, are likely to redesign the geostrategic image in the wider area.

As a result, the uncertainty in international markets is at a very high level as possible severe bumps in oil installations and/or the closure of Iran’s straits will lead to a large increase in oil prices, strongly rising inflation.

The USA

In the US, the temporary suspension of high duties with the aim of closing bilateral trade agreements through negotiations, and in particular the apparent agreement with China have significantly reduced consumer concern about a strong increase in inflation.

The latest evidence confirms that inflation remains very close to the target of 2% of the Fed without a tendency to be valuable. The conditions in the labor market, but also in general, the latest financial data remain positive, though less favorable than the late 2024.

However, in combination with the evolution of precursor indicators and high uncertainty, the economy continues to develop but at a significantly lower rate, and the Fed does not seem ready to immediately reduce its basic interest rate. At the same time, investors emphasize the need to formulate an appropriate strategy to tackle high fiscal debt.

Eyrozoni

In the eurozone, significantly higher growth in the first quarter than previously estimated (0.6% versus 0.3%) surprised positively, but does not change the prospect for the next period. The limited internal demand, the lack of trade agreement with the US, the possible redirect in the European market for part of the “lost” exports of third countries (which intensifies competition and limits the margins of profit or making them negative for domestic companies) are some of the factors.

On the other hand, the constant reductions in the ECB’s basic interest rates, achieving the 2% target for inflation, the decision to increase defense spending over time and the historically low unemployment rate are positively affecting.

China

In China, strong growth seems to continue in the second quarter, though at a slightly more restrained rate. However, the limited ability of internal demand to be the main growth lever in the predicted future makes the exports of critical factor in maintaining a high growth rate in the medium term.

So, the conclusion of a mutually beneficial trade agreement with the US will be a particularly positive development.