Macro

Israel launched airstrikes on Iran's nuclear and ballistic missile program - hitting the Natanz enrichment site, leading nuclear scientists and senior military commanders - and Iran retaliated with missiles the same day, opening direct state-on-state war. US crude jumped 7.3% to $72.98 and Brent 7% to $74.23, the biggest one-day gains since March 2022, as traders feared escalation could disrupt Middle East supply and that Iran could threaten the Strait of Hormuz, through which a fifth of the world's oil passes. The IEA said 1.2 billion barrels of emergency stocks were available, and analysts noted no oil infrastructure had yet been hit.

At The Hague summit, NATO allies agreed to more than double their defence spending target from 2% to 5% of GDP by 2035 - at least 3.5% on core defence plus up to 1.5% on security-related infrastructure - with members required to submit annual plans showing a credible path. Secretary-General Mark Rutte called it a 'quantum leap' in collective defence, driven by the long-term Russian threat and years of US pressure on European allies and Canada to share the burden. The commitment locks in roughly a decade of alliance-wide rearmament and a strengthened defence industrial base.

China has expanded export restrictions on rare earths and related technologies, requiring licenses for foreign entities using Chinese-sourced materials or IP, with exemptions for military-linked entities. The move strengthens Beijing's geopolitical leverage in critical supply chains, potentially impacting global high-tech and defense sectors. The timing suggests strategic positioning ahead of possible U.S.-China trade talks, aiming to pressure Washington for concessions.