1. Geopolitical turmoil & soaring oil prices 🌍
Escalating tensions between Israel and Iran have rattled global markets, with Brent crude jumping over 2–7% in June .
Markets fear any disruption to oil flows could drive inflation higher—raising concerns from central banks and hitting stocks.
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2. Trade war and tariffs
Ongoing U.S. tariffs on China, Canada, and Mexico have injected uncertainty into manufacturing and trade, weighing on economic growth and boosting inflation expectations .
April’s trade-drama triggered a large market drop (S&P 10%+ in days), and volatility remains elevated .
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3. Slowing earnings & economic data
U.S. consumer spending cooled—May retail sales declined 0.9%, while several companies like Accenture reported weak metrics .
Market leaders, especially in tech, are still priced high (S&P forward P/E ~22), making them vulnerable amid growth concerns .
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4. Central bank policy confusion
Diverging global monetary policies are adding stress: Norway and Switzerland cut rates unexpectedly, while the Fed remains steady—even as tariffs spark inflation fears .
UBS, Schwab, Fidelity and others warn that tariff-related inflation and cooling growth make for a volatile backdrop .
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5. Bearish sentiment
Professional investor surveys (e.g., Barron’s Big Money Poll) show the most bearish outlook in nearly 30 years—only 26% bullish vs 32% bearish .
Recession risk projections are rising, with Moody’s and others estimating a 50–90% chance in 2025, tied to tariffs, inflation, and weak growth .
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🧭 What to watch next
Factor Why it matters
Geopolitics Any flare-up in the Middle East could push oil higher and roil markets.
Fed outlook Powell’s congressional testimony and upcoming data (like June PCE) will be pivotal.
Earnings season Guidance from major companies (especially tech) may shift investor sentiment.
Trade negotiations Any diplomatic progress could ease tariff-related uncertainty and calm markets.
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Final takeaway
Markets have turned more volatile recently due to a convergence of geopolitical risks, tariff-driven inflation worries, lukewarm economic indicators, unclear central bank signals, and sharply negative sentiment. It's a "high-wire" environment, as UBS puts it —investors are cautious, and many are shifting to defensive assets until more clarity arrives.