Global Markets Swing as CPI Cools, Oil Spikes 12.5%

This week, global markets experienced a tug-of-war between two significant events: a softer-than-expected U.S. Consumer Price Index (CPI) and a sudden spike in crude oil prices due to geopolitical tensions in the Middle East. The U.S. CPI print showed a modest increase of 0.1% month-on-month and 2.4% year-on-year, fueling hopes that the Federal Reserve might start easing monetary policy before the summer. However, Israel’s retaliatory strikes on Iranian assets reignited concerns about Middle East risk, leading to a re-pricing of crude supply fears and discussions about a potential Strait of Hormuz choke-point.

Against this backdrop, U.S. benchmarks hovered within 2% of record highs, while European indices slipped as energy costs impacted margins. Asian markets traded mixed, with China’s export miss keeping metal bulls in check. The dollar index initially slid to a three-year low near 97.8 before recovering some ground, leaving investors seeking havens in gold and Treasuries while also chasing risk in tech and DeFi tokens.

Equity markets reacted to the cooling CPI and Middle East shock with mixed results. In the United States, the S&P 500 slipped 1.1% on Friday after Israel’s strike on Iran but finished the week almost unchanged, still sitting less than 3% below its February record high. In Europe, energy names like Shell and BP cushioned the STOXX 600, but the index fell 0.9% on Friday and logged a weekly loss as travel and leisure and autos slumped due to higher oil prices and flight diversions. The UK’s FTSE 100 notched a record close on Thursday thanks to energy strength, before ending the week fractionally lower. In Asia-Pacific, a chip-led bounce kept Japan’s Nikkei 225 on course for a second weekly advance, while India’s Nifty 50 and Sensex fell as higher crude hurt refiners and airline stocks tumbled after the Air India crash. Globally, energy and defense sectors outperformed, while airlines, autos, and Indian oil marketing companies were notable laggards.

In the commodities market, oil prices spiked while gold found refuge. Brent crude jumped 12.5% on the week to $74.23, its biggest jump since 2022, as roughly 20% of global oil transits through the now-vulnerable Strait of Hormuz. Gold added 1.6% as investors sought safe havens. Copper futures ended the week down 2%, and the Australian dollar slid 0.7% against the U.S. dollar as China’s export miss impacted commodity prices.

In the currency and forex markets, the dollar index jumped 0.5% on Friday to 98.2, snapping a two-day slide, but is still headed for a second straight weekly fall on softer U.S. data. The Japanese yen faced a knee-jerk sell-off to ¥143.9 per USD on Friday, reversing an earlier weekly gain of almost 1% as safe-haven flows waxed and waned. The euro and British pound both slipped 0.4–0.5% as investors rotated into the greenback. The Indian rupee edged lower, pressured by the oil spike and broad dollar strength. Markets await the Federal Reserve’s meeting on June 19 for fresh rate-path clues and watch the Bank of Japan’s bond-buying tweak as the yen tests authorities’ pain threshold.

In the bond market, U.S. 10-year Treasury yields sank to a one-month low of 4.31% on safe-haven buying, after spiking to 4.42% intraday. The weekly change is a modest -3 basis points. Strategists still expect the Fed to hold at 4.25-4.50% next week but see futures pricing two cuts by year-end. In Europe, Bunds firmed after German May CPI confirmed a cool 2.1%, while peripherals tightened on ECB reinvestment talk.

In the crypto and alternative assets market, DeFi tokens outperformed major cryptocurrencies as institutions continued to buy. Bitcoin (BTC) closed the week at $105.3K, up 3.2%, while Ethereum (ETH) gained 2.7% to $2,520. U.S. spot-ETH ETFs soaked up $240 million on June 12, topping BTC inflows for the day and cementing ETH’s “digital bond” narrative. Aave (AAVE) popped 22% intraday on June 10 after SEC Chair Paul Atkins floated an “innovation exemption” for DeFi platforms. Uniswap (UNI) gained 12.7% to $7.25 as daily active addresses jumped 31% week-on-week. Crypto-fund assets under management hit a record $167 billion in May on $7.05 billion of net inflows, hinting that institutions are treating digital assets as a hedge against equity-rate volatility.

Looking ahead, next Wednesday’s Fed dot-plot and any word on strategic reserves from OPEC+ will decide whether the rally broadens or retreats. If Brent holds above $80 while core CPI stays south of 3%, we could see a rare “good-inflation, good-growth” window, short-lived but powerful enough to push global equities into fresh highs before summer liquidity thins out. For investors, that means staying nimble: keep a toe in energy, maintain hedges in Treasuries and gold, and don’t ignore the quiet accumulation happening in quality DeFi names.