Middle East geopolitical uncertainty has significantly escalated.

This follows a US missile attack on Iranian nuclear facilities, which Iran retaliated against with a missile attack on an American airbase in Qatar late on Monday.

Meanwhile, gold prices have struggled to hold above $3,400 an ounce, indicating that the metal is not attracting a significant safe-haven bid.

Safe-haven demand for gold has been constrained, with some analysts attributing this to the conflict remaining localized. Similarly, oil prices are struggling to maintain gains despite the ongoing instability.

“Gold’s inability to hold early gains could suggest that traders don’t expect hostilities to escalate further,” said David Morrison, senior market analyst at Trade Nation. 

Alternatively, it could simply be profit-taking in an otherwise well-supported market. More broadly, prices continue to consolidate, and are currently little more than 4% below April’s record high of $3,500.

Gold in diversified portfolio

Market analysts at UBS highlight gold’s value within a diversified portfolio, emphasising that its strength is not primarily as a hedge against geopolitical events, despite its lackluster performance as a safe haven, Kitco.con said in a report.

“Investors, though, might benefit from thinking about gold from the perspective of portfolio diversification, rather than as a discrete trade that hinges on the price level,” Julian Wee, Investment Writer at UBS was quoted in the report.

Wee highlighted that portfolio managers see gold as a versatile asset, citing data from the World Gold Council’s Annual Central Bank Gold Survey. 

The survey indicated that the primary reasons for holding gold are its ability to perform well during uncertain times, its effectiveness as a diversification tool, and its role as a reliable store of value.

Wee said:

The current geostrategic environment supports all these factors, albeit to varying degrees. The Trump administration’s unpredictable policy-making contributes to an erosion of confidence, which may remain a key driver in the near term. Investors should be mindful of the indicators pointing to a sustained move out of the USD, and gold is likely to play a crucial role in this transition.

Bullish outlook remains

UBS maintains a bullish outlook on gold, reiterating its $3,800 per ounce upside target despite the yellow metal’s current sideways trading pattern.

Wee further stated, “We anticipate continued strong demand from central banks and ETFs. Gold also functions as a politically neutral, liquid store of value, replacing the USD in this regard.”

However, Wee highlighted alternative avenues for investors to leverage gold’s value, even amidst price consolidation. 

He proposed exploring corporate debt from gold miners, with some bonds offering yields of approximately 6%.

Despite record-high gold prices, the mining sector has struggled to attract consistent investor interest.

However, producers have maintained significant margins in recent years due to stable production costs.

Wee noted that these companies have successfully reduced net leverage and bolstered their balance sheets, thanks to robust free cash flow generation.

We expect M&A activity to continue in a lower-risk manner, helping preserve the strength of their financial metrics.

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Starbucks, the US cafe chain, has denied a report by Chinese financial magazine Caixin suggesting it was considering a full sale of its China operations, according to a Reuters report. 

Starbucks stated it is not currently contemplating such a sale. Caixin’s report did not disclose its source of information.

Caixin reported on Monday that Starbucks has engaged in preliminary discussions with over a dozen potential buyers, citing unnamed sources who did not specify the assets for sale.

A company spokesperson said in a statement as per the Reuters report:

I can confirm Starbucks is not currently considering a full sale of its China operations.

Formal sale process initiated in May

According to the report, Starbucks initiated a formal sale process for its China operations in May. Interested buyers were asked to submit responses to a questionnaire by the end of last week.

Goldman Sachs advised the Seattle-based company in its inquiries to prospective buyers of Starbucks China. 

The company sought information on corporate culture, management style, sustainability practices, employee treatment, potential deal structure, and business plans. 

Starbucks has yet to decide on the specifics of its China business divestment.

Options include selling a controlling or minority stake, and whether to retain certain operations like its supply chain, according to two sources quoted in the report. 

Opened in 2023, Starbucks’ 80,000-square-meter Coffee Innovation Park in Kunshan, near Shanghai, is a $209 million (1.5 billion yuan) roasting plant. It possesses the capacity to supply all Starbucks stores in China.

Starbucks received responses from over 20 institutions, including several private equity firms.

Buyout firms such as KKR & Co, Fountainvest Partners, and PAG have expressed interest in acquiring a stake in Starbucks’ China business, Reuters had reported in February.

Domestic competition 

Starbucks’ recent divestment reflects a strategic shift in response to its declining market dominance in China. 

The company has faced fierce competition from a new wave of domestic coffee chains, primarily Luckin Coffee and Cotti Coffee, which have aggressively cornered the market with significantly lower price points. 

This fierce competition has been exacerbated by a broader trend of consumer frugality in China, leading many to question the value proposition of Starbucks’ premium-priced beverages, which typically hover around 30 yuan ($4.20) per cup.

This erosion of market share is not merely a pricing issue; it also signals a deeper challenge to Starbucks’ brand perception in China. 

While Starbucks initially capitalised on its “third place” concept and aspirational Western branding, Chinese consumers are now increasingly drawn to local brands that offer both affordability and convenience, often leveraging technology for seamless ordering and delivery. 

Luckin Coffee, in particular, pioneered a tech-driven “new retail” model, rapidly expanding its footprint with smaller, pick-up oriented stores and leveraging deep discounts to quickly onboard a massive customer base.

Cotti Coffee has followed a similar trajectory, further intensifying the price war.

The current economic climate in China, characterized by cautious consumer spending, has amplified these competitive pressures. 

As disposable incomes tighten, consumers are more inclined to opt for budget-friendly alternatives without compromising on taste or accessibility.

This has created a fertile ground for Luckin and Cotti to flourish, making it increasingly difficult for Starbucks to justify its premium pricing strategy. 

Market share falls

According to market research from Euromonitor International, Starbucks’s market share in China decreased from 34% in 2019 to 14% in 2024.

As major e-commerce firms in China boost their food delivery and “instant retail” (deliveries within one hour) businesses through consumer subsidies, price pressures have intensified.

Subsidies and coupons have driven down the price of a delivered cup of coffee to under 5 yuan, a significant reduction for consumers.

Starbucks recently reduced the price of some of its non-coffee iced beverages in China. 

This marks the company’s first-ever price drop in the country, with an average reduction of 5 yuan per drink, announced earlier this month.

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Asian technology stocks are primed to rally by another 15% to 20% this year, driven by surging investor optimism in artificial intelligence, according to analysts at JPMorgan Chase & Co.

The firm cited rising capital expenditure in data centers and continued earnings upgrades in key semiconductor names as the primary tailwinds.

“AI will continue to lead this upcycle on the growth in datacenter capex in 2025 and more confidence in 2026 growth,” analysts including Gokul Hariharan wrote in a report.

“We are not advising any meaningful rotation away from AI stocks in the next three months and would prefer” to stick with the winners.

JPMorgan’s top picks include regional chip giants such as Taiwan Semiconductor Manufacturing Co. (TSMC), SK Hynix Inc., Advantest Corp, and Delta Electronics Inc., all of which are expected to benefit from steady demand and positive earnings revisions over the next year.

AI-related stocks have outpaced broader Asian equity markets this year, as reflected in Bloomberg’s regional semiconductor index, which has risen over 12%.

Robust demand for AI memory chips from global tech majors has kept supply chains busy and investors optimistic, with semiconductor firms emerging as the clearest beneficiaries of the generative AI boom.

SK Hynix rallies on Tuesday; analysts expect strong earnings

SK Hynix shares surged as much as 9.1% on Tuesday, spearheading a broader rally in South Korean chip stocks and lifting the Kospi index ahead of most regional benchmarks, which also saw gains following President Trump’s announcement of a Middle East cease-fire.

The stock is on course to post its sharpest daily gain in more than two months.

SK Hynix, a key South Korean supplier of high-bandwidth memory (HBM) chips for US AI leader Nvidia, is widely expected by analysts to post strong earnings in the coming quarters, fuelled by sustained demand from the global AI boom.

The company is also seen as a prime beneficiary of South Korea’s new AI-focused agenda under President Lee Jae-myung, who has pledged a 100 trillion won (approximately $72.93 billion) investment to transform the country into a global AI leader.

Geopolitical headwinds remain

Meanwhile, SoftBank’s founder Masayoshi Son is reportedly in discussions with TSMC to co-develop a $1 trillion AI and robotics manufacturing hub in Arizona, dubbed “Project Crystal Land.”

Modeled after China’s Shenzhen, the project is envisioned as a sprawling innovation zone for next-generation industrial robots and chips, according to Bloomberg.

Despite the positive sentiment, global chipmakers are facing renewed geopolitical pressures.

Shares of TSMC fell on Monday following a Reuters report that the US Department of Commerce is considering revoking authorizations that allow companies like TSMC, Samsung, and SK Hynix to ship American equipment to their Chinese plants.

Jefferies analysts believe the move may be a bargaining tactic by the Trump administration amid trade negotiations with China.

“The revocation would likely do more harm to these companies than to China,” the analysts wrote, adding that the US still wants major chipmakers to deepen their investments domestically.

Cautious outlook beyond 2025

While near-term forecasts remain upbeat, some analysts warn that the semiconductor cycle may face challenges by 2026.

Morningstar’s Phelix Lee said in a note that the sector is likely entering the early phase of a downcycle.

Concerns include elevated valuations, uncertainty over tariffs, and a potential mismatch between capital spending and long-term demand.

Lee estimates that capital expenditure from major US and Chinese tech firms will exceed $300 billion in 2025—representing a 40% increase year-on-year.

“This sets a high bar for sustaining momentum into 2026,” he noted. As a result, Morningstar recommends investors focus on best-in-class names such as TSMC and GlobalWafers.

Non-AI sectors see limited upside

JPMorgan’s report also urged caution on non-AI-related tech sectors, such as smartphone and PC manufacturers.

These companies may continue to see earnings downgrades amid weak consumer demand and fading impact from China’s consumption subsidies.

As the AI race reshapes the region’s tech landscape, investors are keeping their focus on the key players driving the transformation. While short-term catalysts remain in place, navigating the long-term risks may be crucial for sustained gains.

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The war between Israel and Iran lasted just under two weeks. Then, without warning, US President Donald Trump got on social media and said it was over. He called it a “Complete and Total Ceasefire.” 

The missiles stopped flying, for now.

But the truth is that there’s no signed agreement. No official statements from Iran or Israel. No roadmap for what happens next. Trump says the war is over “forever.” 

Iran says it’s waiting to see if Israel really stops. And while the US claims a diplomatic win, the battlefield is still hot.

This story is about diplomacy, credibility, and how fast modern wars can now start and stop. It’s also a glimpse into how international power is being reshuffled in real time. 

How did we even get here so fast?

Just over a week ago, Israel escalated airstrikes deep into Iranian territory, targeting military and nuclear sites. 

In response, Iran fired long-range missiles at Israeli cities, killing civilians and damaging infrastructure. 

Then, over the weekend, the US entered the fight. Trump ordered over 125 American warplanes to strike three Iranian nuclear facilities.

Iran hit back with missiles aimed at a US airbase in Qatar, but none caused casualties.

According to Trump, the Iranians gave early warning to Qatar so the US could prepare. Iran’s foreign ministry later called the strike symbolic. No Americans were hurt.

Then came the surprise: on Monday night, Trump declared that Iran and Israel had agreed to stop fighting. He said he brokered the deal himself, working through Vice President JD Vance, Secretary of State Marco Rubio, and Qatari leaders. 

Iran would stop firing for 12 hours, followed by Israel for the next 12. That was the plan.

The problem however, is that Iran never confirmed it agreed to this. Foreign Minister Abbas Araghchi said there was no deal; only a willingness to pause retaliation if Israel stopped first.

And Israel didn’t make a public statement at all. Still, after a brutal final round of strikes, the violence paused. So, was Trump bluffing? Or did it work?

Who gained what and who took the hit?

For Trump, the optics are a win. He looks like a leader who can start and end a war in under two weeks, without American casualties. 

The timing helps his campaign. The war stops before it drags the US into a broader conflict, and he gets to call it a “peace deal.” His team even branded it “The 12-Day War.”

For Iran, the picture is more complex. Its nuclear program took a hit. Civilian casualties were high, with over 400 dead and 3,000 injured, according to Iranian officials. 

But its leadership avoided a wider war that could have collapsed its economy or triggered regime instability. Iran retaliated just enough to save face, then pulled back.

Israel got to test its long-range capabilities deep inside Iranian territory and may have inflicted lasting damage. 

But the cost was also high. Iranian missile strikes reached Beersheba, killing civilians and exposing the limits of Israel’s air defense. Some Israeli ministers openly called for regime change in Tehran, which further complicated diplomacy.

Qatar, however, emerged as the biggest diplomatic winner. The Gulf nation hosted the US base Iran targeted and played go-between for Trump’s ceasefire push.

It’s now the quiet broker of Middle Eastern diplomacy, expanding its soft power far beyond gas exports.

Oil markets delivered the clearest verdict: the threat of escalation was real, and its sudden removal erased nearly all of the risk premium. Brent crude and WTI both plunged over 7%, and early trading the next day saw further losses of nearly 3–5%.

This price reset benefits energy importers like India, Japan, and the eurozone, all of which were exposed to last week’s price spike. But it also exposes how easily geopolitical shocks can swing commodity markets, especially when US involvement is unpredictable.

Is the ceasefire holding or just a pause?

Right now, there’s no active fighting. That alone is significant. But without a formal agreement, verification, or guarantees, it’s not technically a ceasefire but a mutual timeout.

Iran has stated publicly that it won’t continue attacks if Israel stops first. But it hasn’t signed anything. 

Israel hasn’t confirmed anything either. The US took the lead in framing the ceasefire, but that framing depends on all sides wanting to avoid the next step.

In a phone interview with NBC News, President Donald Trump declared the ceasefire between Israel and Iran would be permanent, saying:

“I don’t believe they will ever be shooting at each other again.”

American diplomat Dennis Ross said:

For now, I think this is going to hold, and I think you will have an end to the war, Iran has no interest in resuming anything soon.

This is a fragile arrangement. It worked because both sides hit a limit. Iran didn’t want more economic damage. 

Israel achieved key targets. Trump got the headlines. But nothing fundamental has changed.

Iran’s nuclear program is wounded, not gone. Israel still sees Iran as an existential threat. And Iran’s military still has a long-range missile arsenal ready.

The three scenarios ahead

The first option is a long quiet period. Iran regroups, Israel pulls back, and quiet diplomacy begins. Qatar stays involved, and the US watches from a distance. Trump sells the moment as proof of strength.

The second option is sudden re-escalation. A new Israeli strike, a proxy militia in Iraq, or a miscalculation in the Gulf could light the match again.

The third and most likely scenario is the return of the shadow war. Cyberattacks. Sabotage. Naval harassment. Assassinations. All beneath the surface. All deniable. 

This is how Israel and Iran have fought for years. The recent open warfare just reminded the world of the stakes.

The guns may be silent, but nothing is resolved. Iran’s nuclear program is still alive. Israel’s fears haven’t changed. Trump’s announcement gave everyone an excuse to stand down. 

But this ceasefire isn’t a final act. It’s just intermission.

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Shares of Commonwealth Bank of Australia (CBA) surged to a record high on Tuesday, buoyed by news of a ceasefire between Iran and Israel announced by US President Donald Trump.

The announcement sparked renewed optimism in financial markets, with investors pivoting toward safer assets like Australian equities.

CBA’s share price rose as much as 2.3% to A$188.55 in early trading, propelling its market capitalization past the $200 billion mark for the first time, according to Bloomberg data.

The rally solidified CBA’s position among the ten largest global lenders, surpassing Royal Bank of Canada’s market value of $179 billion.

“The Australian market tends to be sensitive to geopolitical developments as heavyweight mining stocks are exposed to commodity prices, and the ceasefire announcement has been a catalyst for the strong recovery after a few disappointing sessions,” said Junvum Kim, senior sales trader at Saxo Asia Pacific.

However, despite the geopolitical tensions which have rattled global markets, CBA has continued to attract investors, largely due to Australia’s perceived economic stability and the bank’s dominant role in the domestic financial sector.

What is behind CBA stock’s appeal among investors?

As the largest constituent of Australia’s benchmark index, making up 12%, CBA has become a go-to stock for offshore investors seeking defensive exposure.

“The driving reason for this continued rally is that there are still offshore investors who want exposure to the Australian stock market,” said Tony Sycamore, a market analyst at IG Australia in Sydney in a Bloomberg report.

Investors looking to invest in the relative safety of the nation’s equities are heading toward CBA, he added.

Source: Bloomberg

The bank’s long-term performance backs up investor enthusiasm.

Over the past five years, CBA’s share price has climbed more than 170%.

This is despite its earnings per share growing at a modest 5.4% annually—suggesting that market sentiment has lifted valuations beyond what earnings alone would justify.

Valuation concerns linger despite momentum

However, some analysts remain cautious about the sustainability of CBA’s rally.

Commonwealth Bank is seen as having the least return potential among major global lenders.

It also ranks among the most expensive bank stocks, trading at 30 times forward earnings—double the valuation of JPMorgan Chase & Co., which trades at a multiple of 15.

“Commonwealth’s A$300 billion market capitalization is being driven more by the absence of better investment alternatives than by its intrinsic strengths,” Citi analyst Thomas Strong wrote in a note to clients.

He believes that investors have largely chased earnings momentum, joining a broader trend of rotating into bank stocks from other sectors.

He attributes much of the rally to passive investment flows creating a structural squeeze.

Strong warns that history suggests sector rotations—when investors shift funds between industries—can unfold rapidly, potentially putting pressure on the stock.

Outlook: what should you do with the stock?

According to the Wall Street Journal, 10 of 15 analysts covering the stock recommend selling it, with four underweight on the stock, with an average price target of $117.15, an almost 38% downside.

Macquarie, for instance, is bearish, while Citi and UBS warn of stretched valuations and limited core profit growth.

As conviction builds around alternative investment opportunities, Thomas expects this to serve as the trigger that ends Commonwealth Bank’s stretch of share-price outperformance.

He expects that growing conviction in alternative investment ideas could serve as the trigger for a broader correction in CBA’s stock price.

“Short-term momentum is self-fulfilling. The stock’s rise has attracted algorithmic traders and retail investors chasing returns, creating a feedback loop. As shows, the disconnect between its soaring share price and stagnant earnings is stark,” said AInvest.

“The CBA rally is a short-term liquidity-driven phenomenon, not a reflection of durable value. While the stock may continue to climb in the near term, the risks of a sharp correction are high,” the platform says, urging investors to “avoid chasing” the momentum.

“Even if geopolitical distractions keep investors complacent, the fundamentals and broker warnings suggest a peak is near,” it says.

The platform advises investors to wait for a pullback and look for dips below $150 before considering entry, ideally paired with clearer macro stability or earnings upgrades.

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