(The opinions expressed here are those of the author, a

columnist for Reuters.)

By Mike Dolan

LONDON, June 16 (Reuters) - What matters in U.S. and

global markets today

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World markets were calm on Monday, even in the face of this

weekend's escalation of the Israel-Iran conflict, as volatile

oil prices fell slightly from Friday's 4-month peak.

I'll discuss all of today's market-moving news below.

Today's Market Minute

* Iranian missiles struck Israel's Tel Aviv and the port city of

Haifa before dawn on Monday, killing at least eight people and

destroying homes, prompting Israel's defense minister to warn

that Tehran residents would "pay the price and soon".

* Iran has told mediators Qatar and Oman that it is not open to

negotiating a ceasefire while it is under Israeli attack, an

official briefed on the communications told Reuters on Sunday,

as the two foes launched fresh attacks and raised fears of a

wider conflict.

* A two-day manhunt ended on Sunday with the arrest of a

57-year-old man for allegedly killing a Minnesota Democratic

state lawmaker and her husband while posing as a police officer,

Governor Tim Walz said.

* U.S. President Donald Trump's administration is considering

significantly expanding its travel restrictions by potentially

banning citizens of 36 additional countries from entering the

United States, according to an internal State Department cable

seen by Reuters.

* When watching energy markets during times of heightened Middle

East tensions, it can be helpful to look more at what is not

happening, rather than fixating on the dramatic headlines. Read

the latest from ROI columnist Clyde Russell.

Markets calm despite Israel and Iran exchanging fire

Israel began its military strikes with a surprise attack on

Friday that targeted the top echelon of Iran's military command

and damaged its nuclear sites. The move occurred after the

United Nations nuclear watchdog declared for the first time in

20 years that Iran was in breach of its non-proliferation

obligations.

Iran has vowed retaliation and reiterating Tehran's official

stance against developing nuclear weapons. Iran has always said

its nuclear program is peaceful, although the Board of Governors

of the U.N. International Atomic Energy Agency declared last

week that Tehran was in violation of its non-proliferation

obligations. Iran's foreign ministry and atomic energy

organization said the findings were politically motivated and

lacked technical or legal foundation.

The attacks from both sides were far more extensive than the

more limited exchanges between the two in recent years, but oil

production and export facilities have largely been unaffected so

far.

Oil prices fell back after jumping about 7% to

4-month peaks on Friday, with U.S. crude slipping to $72.40 per

barrel from last week's high of $77.62. Gold also

retreated, having failed to breach April's record last week.

U.S. Treasury yields held Friday's gains, but remain

largely stuck in recent ranges as the Federal Reserve meets this

week and prepares to release its quarterly economic forecasts. A

20-year bond auction will occur later today.

Wall Street stock futures recovered some of Friday's

losses before today's bell, and stocks in Asia and Europe

rallied. Middle East bourses, however, continue to fall.

Even as oil analysts and brokers put forward $100-plus

forecasts on "worst-case" scenarios, crude remains down 8%

year-on-year and still subdued historically, a critical factor

for investors focused on the inflationary impact of any new oil

shock.

The last time crude topped $100 per barrel was after

Russia's full-scale invasion of Ukraine in 2022, but it

sustained those heights for less than four months. Prior to

that, you have to go back over a decade to see crude hit triple

digits.

A key question is whether the conflict will lead to disruptions

in the Strait of Hormuz. About a fifth of the world's total oil

consumption, or some 18 to 19 million barrels per day of oil,

condensate and fuel, passes through the strait.

The possibility of further escalation looms over a meeting of

the Group of Seven leaders in Canada, with U.S. President Donald

Trump expressing hope on Sunday that a deal could be done. But

there is no sign of the fighting abating as we enter the fourth

day of war.

As an indication of how far the situation could spiral, two U.S.

officials told Reuters that Trump had vetoed an Israeli plan to

kill Iran's Supreme Leader Ayatollah Ali Khamenei.

While the G7 talks will likely center on the Middle East

conflict, leaders will also discuss lowering the Russian oil

cap, with European nations and some others expected to go ahead

with the move and further sanctions on Moscow even if Trump

objects.

Beyond geopolitics, it's a week jammed with central bank

meetings.

There is the Fed, of course, which is not expected to move

rates lower until September.

The Bank of Japan started its two-day policy meeting today. The

trade and geopolitical uncertainties are widely expected to keep

the BOJ on hold too.

Likewise, the Bank of England is expected to stand pat until

August.

Perhaps the most notable central bank meeting of this week will

involve the Swiss National Bank, which is widely expected to

move policy rates back to zero. The likelihood of a cut into

negative territory has also risen amid fresh franc strength and

domestic price deflation. The franc flirted with its

strongest level in more than 10 years against the dollar last

week, but held steady on Monday.

Chart of the day

China's new home prices fell in May, extending two years of

stagnation, official data showed on Monday, highlighting

challenges in the sector despite several rounds of policy

support measures. New home prices fell 0.2% month-on-month in

May after showing no growth the previous month. From a year

earlier, prices fell 3.5% in May. The market entered a prolonged

slump in 2021, with debt-laden developers struggling to deliver

homes that buyers had already paid for, further denting consumer

confidence and hitting the wider economy. Monetary and fiscal

supports have been extensive. But even though major cities had

shown tentative signs of recovery in recent months, they saw a

relapse as well in May, snapping a streak of five consecutive

monthly gains.

Today's events to watch

* New York Federal Reserve June manufacturing survey

* G7 summit in Kananaskis, Alberta

* European Central Bank board member Piero Cipollone and

Bundesbank President Joachim Nagel speak

* U.S. Treasury sells $13 billion of 20-year bonds

* U.S. corporate earnings: Lennar ( LEN )

Opinions expressed are those of the author. They do not reflect

the views of Reuters News, which, under the Trust Principles, is

committed to integrity, independence, and freedom from bias.

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