S&P 500 Rally Pauses Before Fed, Nikkei 225 Eyeing 70,000, Crude Oil Plunges to 3-Month Low

Key takeaways

• Global markets paused ahead of the Federal Reserve meeting, with investors reducing risk exposure before Fed Chair Kevin Warsh’s first policy decision and updated economic projections. The S&P 500 slipped 0.6%, while the Nasdaq 100 fell 1.9%.
• The collapse in crude oil prices continues to reshape the macro narrative, as WTI plunged to a three-month low below US$77 per barrel on expectations of a formal US-Iran agreement and the reopening of the Strait of Hormuz, significantly reducing near-term inflation pressures.
• A sharp rotation is underway beneath the surface, with technology and semiconductor stocks underperforming while financials, industrials, and defensive cyclicals drive the Dow Jones Industrial Average to fresh record highs.
• Chart of the day: Nikkei 225’s minor bullish acceleration trend remains intact above 68,735/089 key short-term pivotal support

Chart of the day – Nikkei 225’s bullish acceleration trend towards a fresh all-time high

Fig. 1: Japan 225 minor trend as of 17 Jun 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance.

The minor uptrend phase of the Japan 225 CFD (a proxy for the Nikkei 225 futures) remains intact since the 11 June 2026 intraday low of 62,329, supported by a renewed bullish momentum condition in the hourly RSI (see Fig. 1)

Watch the 68,735/089 key short-term pivotal support to maintain the bullish bias to seek out the next intermediate resistances at 70,180 and 71,790/72,735 (Fibonacci extension cluster).

However, failure to hold and an hourly close below 68,089 negates the bullish tone, opening scope for a retracement to retest the next intermediate supports at 67,224 and 65,875 (also the 20-day moving average).

Top macro headlines

• S&P 500 rally falters on eve of new Fed Chair Kevin Warsh’s debut: A sweeping rally that brought equities to the edge of all-time highs paused on Tuesday, 17 June. Trading desks trimmed exposures ahead of the highly anticipated Federal Reserve interest rate decision, marking newly appointed Chair Kevin Warsh’s inaugural policy showcase. The S&P 500 slipped 0.6%, and the Nasdaq 100 underperformed, down 1.9%, as technology giants led a pre-meeting corrective decline. In contrast, the Dow Jones Industrial Average outperformed, rallied by 0.6% to a record high, led by Goldman Sachs (+1.35%) and Caterpillar (+1.24%).
• Crude oil plunges to 3-month low as Strait of Hormuz reopening nears: Energy markets faced a massive liquidation amid heightened expectations of a finalised peace accord between Washington and Tehran. Brent crude broke down below $80 to close at $79.33/bbl, and West Texas Intermediate (WTI) plummeted by 5.6% to settle at $76.61/bbl, marking a fresh 3-month low as the world prepares for the formal reopening of the Strait of Hormuz on Friday.
• SpaceX post-IPO Surge extends to $2.66 trillion to threaten tech giants: Highlighting robust speculative appetite, shares of Elon Musk’s rocket company extended their post-IPO rally. SpaceX surged more than 8% in intraday heavy trading, before settling at a gain of 4.8% on Tuesday, 16 June. The newly public firm surpassed Amazon.com Inc. as the world’s fifth-largest company, with a market capitalisation of $2.66 trillion, about $10 billion more than Amazon’s. Underwriters additionally exercised their greenshoe option, inflating total IPO proceeds to $85.7 billion.
• US housing construction activity slides to lowest volume since pandemic: Reflecting ongoing macro headwinds in the domestic real estate space, US housing starts plummeted a sharp 15.4% m/m. The housing indicator fell below the consensus projection of -2% to its lowest level since May 2020.

Key macro themes

• The Fed’s critical crossroads in forward guidance: The global macro landscape is pinned entirely on the conclusion of the June FOMC meeting. Markets are pricing a near-certain probability that rates will remain paused at 3.50% to 3.75%, but the true focus remains on Kevin Warsh’s upcoming press conference and the updated summary of economic projections. Most economists expect the median dot plot to reflect an upward revision in inflation metrics alongside a drop in the committee’s traditional easing bias. Any hawkish baseline shift by Chair Warsh’s press conference could drastically redefine the global cost of capital heading into the second half of 2026.
• Extraction of the war premium and global supply chain recovery: With hundreds of stranded tankers preparing to move through the Persian Gulf following the preliminary US-Iran peace breakthrough, the deflation of the global energy crunch is rapidly filtering into cross-asset assets. While it will take months for infrastructure and shipping schedules to fully optimise, front-month futures are fast-tracking the extraction of the conflict premium. This supply shock reversal provides central banks with significant breathing room regarding headline price metrics but triggers immediate asset allocation out of defensive resource equities and back into cyclical growth.
• China’s domestic bifurcation and industrial divergence: Macro numbers from the Asia-Pacific region reveal a severe disconnect within the Chinese economy. On one hand, domestic consumption remains deeply damaged, with retail sales contracting 0.6% y/y in May, underperforming consensus estimates. Conversely, industrial production maintained its robust growth trajectory at 4.5% y/y in May (above consensus of 4.3%), supercharged by massive state-level investments in 3D printing, lithium-ion networks, and advanced industrial robots. This bifurcation suggests persistent weak domestic demand, while state resources are being channelled to the external sector.

Global markets impact (last 24 hours)

Equities: The S&P 500 fell 0.6%, and the Nasdaq 100 slid 1.9% on profit-taking across mega-cap tech and semiconductors (SOX – 5.7%). The Dow Jones Industrial Average rose 0.6% to lead US indices toward a record high, boosted by a powerful defensive rotation into cyclical and financials. The Stoxx Europe 600 inched higher by 0.3% to a record high.

Fixed Income: Sovereign bond yields dropped as tumbling crude oil prices eased long-term inflation fears. The benchmark 10-year US Treasury yield fell 3 basis points to 4.44%. Germany’s 10-year Bund yield slipped to 2.94%, almost a one-month low, while Britain’s 10-year Gilt yield held near 4.81%.

FX: The US Dollar Index remained little changed. The euro ticked up 0.2% to trade at $1.1608, while the British pound hovered at $1.3427, inching up slightly above its 20-day moving average. The Japanese yen weakened slightly to 160.47 per US dollar near the prior critical intervention level of 160.65, following BoJ’s decision to end its JGBs tapering programme from April 2027.

Commodities: WTI crude oil fell 5.6% to settle at $76.61/bbl, and Brent fell below $80 on Persian Gulf de-escalation. Precious metals gained a modest lift from declining sovereign bond yields, with spot gold climbing 0.5% to settle at $4,331/oz but still below the 20-day moving average ($4,395/oz).

Asia Pacific impact

• Mixed performances in Asian equities on shifting factors: Asia-Pacific equity bourses mixed in early trading. Japan’s Nikkei 225 rallied by 0.4%, looking to set another fresh all-time high milestone at 70,000 on the backdrop of a restrained 10-year JGB yield at 2.62% (below its 30-year high of 2.81% printed in May 2026). Profit-taking was seen in semiconductor- and technology-heavy South Korea’s KOSPI and Taiwan’s TAIEX, with intraday losses of 0.2% and 0.8%, respectively. Meanwhile, the defence-oriented Singapore’s STI soared to 0.8% towards a new intraday record high of 5,160.
• Aussie dollar supported by RBA hawkish hold: The Australian Dollar whipsawed and ended Tuesday’s session almost unchanged at 0.7067 against the greenback as market participants digested RBA Governor Bullock’s “hawkish cautious” messaging, with the possibility of further monetary policy tightening in Australia if inflation pressures resurface.

Top 5 events to watch today

1. UK Core Inflation Rate (May) – 2:00 pm SGT (consensus: 2.7% y/y, Apr: 2.5% y/y) Impact: GBP/USD, GBP crosses, UK Gilts, FTSE 100
2. US Retail Sales (May) – 8.30 pm SGT (consensus: 0.5% m/m, Apr: 0.5% m/m) Impact: USD, US stock indices, short-term US Treasuries
3. EIA Weekly Stockpile Change – 10:30 pm SGT Impact: WTI and Brent crude
4. Fed Interest Rate Decision & Economic Projections – 2:00 am SGT, Thursday Impact: All asset classes
5. Fed Press Conference – 2.30 am SGT, Thursday Impact: All asset classes