Last weekend, the United States carried out airstrikes on three key Iranian nuclear sites1, escalating tensions in the region. In response, Iran fired missiles at the US Al Udeid Air Base in Qatar on Monday. Following these events, a ceasefire between Israel and Iran was announced on the same date, although its durability remains uncertain. Meanwhile, the already fragile Iranian regime is facing mounting pressure.

Market reactions have been cautious, and geopolitical risks and defence issues remaining prominent, as highlighted by the recent NATO leaders' decision to raise defence spending to 5% of GDP. Looking ahead, we expect market focus to shift towards the US, as the tariff pause ends on July 9th. 

Given the increased geopolitical risks, we recommend maintaining a well-diversified allocation, that includes hedges and exposure to commodities. While we continue to monitor the situation closely, we currently see no reason to structurally revise our mid-year economic outlook. 
 

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1 Fordow, Isfahan and Natanz.

Unless otherwise stated, all information contained in this document is from Amundi Asset Management S.A.S. and is as of 25 June 2025. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi Asset Management S.A.S. and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not a guarantee or indicative of future results.
 

Date of first use: 25 June 2025

Doc ID: 4613182