EMEA Morning Briefing: Iran's Revolutionary Guard Fires Missiles at Ships

MARKET WRAPS

Watch For:

Germany industrial output; no major corporate trading updates expected

Opening Call:

European stock futures were mixed early Tuesday. Asian stock benchmarks were lower; the dollar inched higher; Treasury yields were up; while oil futures rose and gold fell.

Equities:

Stock futures point to a mixed open in Europe, after Iran's Islamic Revolutionary Guard Corps fired missiles at two commercial ships near the Strait of Hormuz early Tuesday, according to a senior U.S. official, marking an escalation that threatens to complicate negotiations to end the U.S.-Iran war.

The move to attack ships with missiles amid talks to end the war demonstrates the power wielded by the Revolutionary Guard, which has been at odds with more moderate voices in the Iranian leadership.

Forex:

The dollar is expected to consolidate this week, CBA senior currency strategist Kristina Clifton said in a note.

"The minutes from the Federal Reserve's policy meeting in June is the key event risk for the week," Clifton said. Market participants will parse the minutes for validation or contrast with Fed Chairman Kevin Warsh's hawkish first post--meeting statement. The minutes might be shorter or provide less insight than usual given Warsh's view that the Fed has provided too much guidance in the past, she added.

Bonds:

Fed Gov. Christopher Waller defended the central bank's practice of providing forward guidance-a stance somewhat at odds with remarks from Chairman Warsh.

"I continue to believe that forward guidance can be a valuable tool that has, at times, significantly strengthened policymaking and will continue to be useful," Waller said. However, he said that there have been times when forward guidance has hindered, rather than helped, policymaking.

"The takeaway is that forward guidance can help speed up policy transmission, but if it is not flexible enough, it can hinder policy transmission. And, in some cases, it's best not to use it at all," Waller said.

Energy:

Oil prices were slightly higher following the firing of missiles at commercial ships by Iran's Revolutionary Guard, as the attack could complicate negotiations to end the U.S.-Iran conflict.

"Continued progress in talks could reinforce the recent downward pressure on prices as supply normalisation advances," BankPro CEO Paolo Broccardo said. "Conversely, any setback in negotiations could quickly reverse the move and revive upward momentum on crude," Broccardo added.

Metals:

Gold fell in early Asian trade. The yellow metal's prices are likely at risk after successive sessions of gains, said Hola Prime's Somesh Kapuria in commentary, noting that gold has remained on a downward trend since the beginning of the year.

This week's FOMC minutes are likely to be pivotal to shaping the near-term path for yields and, by extension, gold, he added.

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Copper prices weakened, as investors remain cautious over the outlook for U.S. trade policy and the Fed, Dongwu Futures analysts said in a note. The global copper concentrate market remains tight, with spot treatment and refining charges falling further into negative territory, reflecting intense competition among smelters for raw materials, they said.

Macro uncertainty is limiting gains as investors are unsure about the U.S. tariff policy, they added. With resilient fundamentals offset by lingering macro uncertainty, copper prices might remain rangebound in the near term, they said.

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Iron ore prices were higher, driven by concerns over tightening supplies. China has reportedly expanded its curbs on Australian iron ore imports, with several domestic steel mills instructed not to purchase any U.S. dollar-denominated cargoes of Fortescue's super special fines product, ANZ Research analysts said.

The move helps offset pressure on prices from a seasonal slowdown in Chinese demand and thin profit margins at Chinese steel mills, which remain squeezed by high coking coal prices, ANZ said.

TODAY'S TOP HEADLINES

IRGC Fires Missiles at Ships in Strait of Hormuz

Iran's Islamic Revolutionary Guard Corps fired missiles at two commercial ships near the Strait of Hormuz early Tuesday, according to a senior U.S. official, marking an escalation that threatens to complicate negotiations to end the U.S.-Iran war.

The attacks come as Iranians mourn Ayatollah Ali Khamenei, the former supreme leader killed at the start of the Iran war. They also follow stepped-up threats by the powerful paramilitary force, which has been undermining talks and warning vessels not to transit the waterway using a route cleared by the U.S. military near the coast of Oman.

Waller Defends Fed's Use of Forward Guidance-in Contrast to Warsh

Federal Reserve Gov. Christopher Waller on Monday defended the central bank's practice of providing forward guidance-a stance somewhat at odds with remarks from new Chairman Kevin Warsh.

"I continue to believe that forward guidance can be a valuable tool that has, at times, significantly strengthened policymaking and will continue to be useful," Waller said at a central banking forum sponsored by the Bank of Italy.

Europe Races to Plug Security Holes After U.S. NATO Pullback

ANKARA, Turkey-America's allies are rushing to find workarounds and replacements for the bombers, warships and other forces the U.S. recently told other NATO members they could no longer rely on in a crisis.

But filling all the holes left by the American pullback-including midair refuelers that are in short supply and long-range strategic bombers that only the U.S. has-is proving challenging for the military alliance and risks leaving its European members, in particular, exposed to rising threats from Russia.

Jet-Fuel Prices Have Plunged but Aren't Resulting in Much Lower Fares

Airlines are finally getting some relief at the jet-fuel pump. Fliers may not share in the savings, though.

Jet-fuel prices doubled in the weeks after the Iran war started, and carriers raised fares to keep up. Now fuel prices are down 40% from their peak in April, but analysts say fares aren't likely to follow because travelers keep paying up.

AI Giants Are Handing Out Tons of Free Computing Power to Grab Startup Share

Hans Ibarra, a founder building an AI-voice startup, has found himself on the receiving end of a big opportunity: Top artificial-intelligence companies such as OpenAI, Anthropic and others desperate to win his business are ramping up discounts.

Across Silicon Valley, startup founders like Ibarra are enjoying a wave of computing credits and fielding competing offers from AI-model makers racing to land new enterprise customers. Cursor, the AI-coding company bought by Elon Musk's SpaceX, offered a 75% discount through July 5.

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Expected Major Events for Tuesday

04:30/NED: Jun CPI

05:00/FIN: May Industrial Production

06:00/NOR: May Industrial Production Index

06:00/GER: May Industrial Production Index

06:00/UK: 2Q Lloyds House Price Index: UK Regional Breakdown quarterly release

06:00/UK: Jun Lloyds House Price Index

06:00/DEN: May Industrial production & new orders

06:30/HUN: Jun CPI

06:45/FRA: May Foreign trade

07:00/CZE: May Retail trade

07:00/AUT: Jun Wholesale Price Index

07:00/SWI: Jun SNB foreign currency reserves

07:00/CZE: May External trade

08:00/ICE: Jun External trade, preliminary figures

10:00/FRA: 1Q OECD Quarterly Labour Market Situation

10:00/FRA: May OECD Harmonised Unemployment Rates

15:59/UKR: May Industrial Production

23:01/UK: Jun KPMG and REC UK Report on Jobs

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July 07, 2026 00:20 ET (04:20 GMT)

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