U.S. forces hit Iran, and Trump said Tehran will "pay the price." May CPI came in at 4.2%, though core was soft at 0.2%. Brent held near $92. Bitcoin clawed back to $62,000 after breaking $60,000. The ECB raised rates by 25 basis points to 2.25% and lifted its inflation forecasts through 2027. SpaceX prices its record IPO after the close.
MARKET PULSE
Thursday opens with the war back on the tape and three major events still ahead.
U.S. forces struck Iran overnight in what the Pentagon called self-defense strikes. Trump said Iran had taken too long to negotiate and would now "pay the price." Tehran said it would reassess diplomatic engagement with Washington.
The ceasefire now exists mostly in name.
But the overnight story is not the only one.
The ECB announced its decision this morning. SpaceX prices its IPO after the close. Adobe (ADBE) reports earnings after the bell.
Each event tests a different part of the market.
Asia absorbed the first shock. South Korea's Kospi fell again as chip stocks remained under pressure following Oracle's earnings reaction. U.S. futures steadied after Wednesday's selloff, when the Nasdaq lost 1.98%, the S&P 500 fell 1.62%, and the Dow dropped 953 points.
Brent crude held near $92. The 10-year Treasury yield stayed around 4.54%.
The Signal
The market spent four days absorbing Iran and oil. Yesterday it absorbed inflation. Today it must absorb a central bank decision, the largest IPO in history, and another night of war headlines.
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ENERGY
The strikes are real. The oil reaction is not.
Brent remains near $92 and WTI near $89 despite another round of U.S. military action. Both are below Monday's highs, when direct exchanges between Israel and Iran first intensified.
The market is watching escalation and refusing to bid crude materially higher.
That is the surface.
The underlying picture remains tighter.
Trump's latest threat followed Iran's reported downing of a U.S. Apache helicopter near the Strait of Hormuz. Gulf infrastructure remains vulnerable. Hormuz traffic is still operating below normal levels.
Yet prices remain restrained because traders continue to believe a deal eventually arrives.
That belief has support.
Saudi Arabia is redirecting more fuel through the Red Sea. Europe is sourcing additional supply from alternative routes. Markets are adapting while diplomacy drags on.
The price action says traders expect negotiations to succeed.
The inventory math says the disruption is still active.
Energy Signal
Oil is falling while the conflict escalates. That reflects confidence in diplomacy, not proof that diplomacy is working. Hormuz remains the key variable.
MACRO
Two central banks. Two different challenges.
The ECB delivered the expected 25 basis point hike, taking its deposit rate to 2.25% and its refinancing rate to 2.40%. The central bank said the Iran war is creating inflation pressure through higher energy prices and raised its inflation forecast to 3.0% for 2026 and 2.3% for 2027.
Europe is no longer debating cuts.
It is debating how many hikes remain.
The problem is growth. The ECB cut its 2026 growth forecast to 0.8% from 0.9% and expects only 1.2% growth in 2027. Policymakers are now trying to contain inflation without pushing the eurozone into recession.
The U.S. story is different.
May CPI rose 4.2% year over year, the highest reading since 2023. Monthly inflation came in at 0.5%.
Energy did most of the work.
Gasoline and fuel prices remain more than 40% above year-ago levels. More than 60% of the monthly CPI increase came from energy.
Core inflation told a different story.
Core CPI rose just 0.2% during the month and 2.9% annually, below expectations on the monthly reading.
That distinction matters.
Headline inflation is being driven by oil. Core inflation still suggests broader price pressures remain relatively contained.
Markets continue to expect the Fed to hold rates next week.
Trump's reaction was notable. He said he loved the inflation report and argued prices would fall once the Iran conflict ends.
Macro Signal
The ECB has already moved. The Fed likely waits. Europe is fighting inflation above 3% with weaker growth, while the U.S. faces a 4.2% headline CPI driven largely by energy. Both central banks are dealing with the same war through different economies.
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CAPITAL
Tonight belongs to SpaceX.
The pricing itself is largely known.
The real event is Friday's opening trade.
That is where price discovery begins.
The setup is complicated because investors are also confronting the cost of the AI buildout.
Oracle (ORCL) reported revenue growth of 21% and cloud infrastructure growth of 93%. Then it announced plans to raise another $40 billion to fund expansion.
Capital expenditures jumped 162% to $55.7 billion.
Free cash flow was negative $23.7 billion.
The business remains strong.
The financing bill keeps getting larger.
Amazon (AMZN) delivered the same message this week with a record C$14 billion bond sale in Canada after raising €14.5 billion in Europe earlier this year.
The hyperscalers are borrowing globally because AI demand continues to exceed available infrastructure.
Adobe (ADBE) reports tonight and tests a different question.
Oracle measures the cost of building AI.
Adobe measures whether AI helps or threatens existing software franchises.
Capital Signal
SpaceX prices tonight. Oracle showed how expensive AI has become. Adobe will show whether incumbents benefit from that spending or get disrupted by it.
CRYPTO PULSE
Bitcoin found support. It has not found a trend.
The bounce was technical.
The structural problem remains.
U.S. spot bitcoin ETFs have recorded 13 consecutive sessions of outflows totaling roughly $5.5 billion. The institutional demand that supported bitcoin through much of the past 18 months remains absent.
Meanwhile, speculative capital continues rotating elsewhere.
Coinbase (COIN) launched SpaceX pre-IPO perpetual contracts. Activity in pre-IPO and real-world-asset products continues rising as bitcoin sentiment weakens.
The market is increasingly treating SpaceX as a competing destination for growth capital.
Strategy (MSTR) remains another key variable.
Investors continue watching for evidence the company is buying bitcoin again after its recent sale broke the long-standing "never sell" narrative.
So far, that confirmation has not arrived.
The Verdict
Bitcoin bounced off $60,000. ETF outflows continue. SpaceX remains the next major test for speculative capital.
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CLOSING LENS
Thursday is the hinge point of the week.
The war escalated overnight and oil barely moved.
Inflation reached 4.2%, yet core inflation remained contained.
The ECB hiked and warned that the inflation outlook has worsened. The Fed still appears likely to hold next week.
SpaceX prices tonight at a $1.77 trillion valuation. Adobe reports after the close. Bitcoin remains near $62,000 with institutional demand still missing.
The same question sits underneath every story.
Can the AI trade keep absorbing higher rates, higher energy costs, and geopolitical risk?
By Friday's close, markets will have an answer from the largest IPO in history.
That answer may shape the rest of the summer.
