Israel-Iran Conflict Triggers Volatility
- Jun 17
- 11 min read
Updated: Jun 19
Tuesday, 17th of June
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What's Moving The Market
Geopolitical tensions between Israel and Iran unsettled global markets last week, triggering a wave of volatility across asset classes. Concerns over potential conflict in the region pushed Brent crude prices up by more than 10% midweek, driven by fears of supply disruptions. While oil prices later stabilised as diplomatic signals emerged, the episode underscored how fragile energy markets remain.
In response to the uncertainty, investors moved into safe-haven assets, with gold prices rising as risk appetite temporarily declined.
There are still no signs of easing in the tensions between Iran and Israel. According to BNP Paribas, current oil prices reflect a risk premium of around 10 US dollars per barrel. As long as Iranian oil facilities are not directly targeted in the conflict or there are no serious threats to blockade the Strait of Hormuz, a spike in oil prices is likely to be short-lived — also due to available reserves in Saudi Arabia, according to Goldman Sachs.
Energy risks are concentrated around the Strait of Hormuz, through which about 20% of global oil and gas flows pass. A disruption to this shipping route could push oil prices up by as much as 25%, Goldman Sachs estimates. It is important to note that China would be particularly affected by any disruption, as an estimated 90% of Iran’s oil exports go to China. The country has no interest in escalating the conflict or jeopardising these vital shipping lanes.
Last Week Market Overview
U.S. Markets
Indices Performance:
S&P 500: Closed at 602.68, up 0.94% for the week.
Dow Jones Industrial Average: Ended at 426.28, gaining 0.82%.
Nasdaq Composite: Rose by 1.5%, driven by tech sector gains.
Market Drivers: Investor sentiment improved following reports suggesting Iran's willingness to de-escalate tensions and resume nuclear talks.
Australian Markets
ASX 200: Despite midweek declines due to global tensions, the index closed the week up 0.3%, supported by gains in energy and mining sectors.
Currency: The Australian dollar weakened by 0.85%, trading at 64.72 US cents.
European Markets
FTSE 100: Closed just shy of its record high at 8,875 points, buoyed by easing oil prices and hopes of de-escalation in the Middle East.
Market Sentiment: Optimism grew as reports indicated Iran's interest in resuming nuclear talks, alleviating fears of prolonged conflict.
Reported Quarterly Earnings
Adobe (ADBE)
Financial Highlights:
Revenue: $5.87 billion, up 11% year-over-year, exceeding the consensus estimate of $5.8 billion.
Non-GAAP EPS: $5.06, compared to $4.48 in the same quarter last year.
GAAP EPS: $3.94.
Operating Income: $2.67 billion (non-GAAP).
Cash Flow from Operations: $2.19 billion.
Segment Performance:
Digital Media Revenue: $4.35 billion, up 11% year-over-year.
Annualized Recurring Revenue (ARR): $18.09 billion, a 12.1% increase year-over-year.
Digital Experience Revenue: $1.46 billion, up 10% year-over-year.
Digital Experience Subscription Revenue: $1.33 billion, up 11% year-over-year.
Guidance Update:
Full-Year Revenue Forecast: Raised to $23.50–$23.60 billion from the previous range of $23.30–$23.55 billion.
Non-GAAP EPS Forecast: Increased to $20.50–$20.70 from the prior $20.20–$20.50.
Q3 Revenue Projection: $5.88–$5.93 billion.
Q3 Non-GAAP EPS Projection: $5.15–$5.20.
AI Innovation:
Adobe continues to invest in AI-driven tools, such as Firefly and Acrobat AI Assistant, which have contributed to user growth and enhanced product offerings.
Market Reaction:
Despite the strong financial performance and raised guidance, Adobe's stock declined by 5.3% following the earnings release. Analysts attribute this to ongoing concerns about competition in the AI space and the pace of AI monetization. Even though the stock is trending lower, the figures and outlook are fundamentally positive. Earnings, margins, and revenue all exceeded targets. The guidance for the year and the current quarter has been raised.
Analysts:
Bank of America analyst Brad Sills has raised the price target for Adobe from USD 424 to USD 475 and continues to rate the stock as “Buy.” According to the analyst, the Q2 results and outlook “reflect solid execution against a backdrop of sluggish software demand.” He adds that Adobe’s AI optionality remains “very much intact.” The upgraded guidance for fiscal year 2025/26 is “a departure from this earnings season, where most software companies have chosen not to carry the upside through to the full year,” which, in his view, points to a more resilient, diversified business and effective implementation of growth initiatives.
Citigroup analyst Tyler Radke says Adobe delivered “a relatively uneventful quarter” that landed “right in the middle” of expectations. Management reaffirmed its annual targets for recurring revenue and issued a slight upward revision to revenue and earnings, mainly due to currency effects. Radke does not expect a significant change in consensus regarding AI’s impact on Adobe’s long-term growth. The stock is still rated “Neutral” with a price target of USD 465.
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GameStop (GME)
Financial Highlights:
Revenue: $732.4 million, a 17% decrease from $881.8 million in Q1 2024, falling short of the $750 million consensus estimate.
Net Income: $44.8 million, compared to a net loss of $32.3 million in the same quarter the previous year.
Adjusted EPS: $0.17, surpassing the expected $0.08.
Operating Loss: $10.8 million, which includes $35.5 million in impairment charges related to international restructuring efforts.
Adjusted Operating Income: $27.5 million, compared to an adjusted operating loss of $55.0 million in Q1 2024.
Segment Performance:
Hardware & Accessories: $345.3 million, down from $505.3 million year-over-year.
Software: $175.6 million, a decline from $239.7 million the previous year.
Collectibles: $211.5 million, a significant increase from $136.8 million, marking a 55% year-over-year growth.
Strategic Developments:
Bitcoin Investment: GameStop disclosed the purchase of 4,710 bitcoins between May 3 and June 10, 2025, as part of its strategy to adopt bitcoin as a treasury reserve asset.
Store Closures: The company closed 590 U.S. stores in the prior fiscal year and announced plans for additional closures in 2025 as part of its ongoing store optimization review.
International Operations: GameStop completed the divestiture of its Canadian subsidiary on May 4, 2025, and plans to exit the French market during fiscal year 2025.
Market Reaction:
Despite the return to profitability, GameStop's stock experienced significant volatility following the earnings report:
Stock Decline: Shares fell approximately 5% in after-hours trading on June 10, 2025, following the earnings release.
Convertible Note Offering: On June 12, 2025, GameStop announced a $1.75 billion convertible senior note offering, leading to an 18.5% drop in stock price that day.
Year-to-Date Performance: As of June 17, 2025, GameStop's stock is trading at $23.32, reflecting a year-to-date decline of over 24%.
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GitLab (GTLB)
Financial Highlights (Q1 FY26):
Revenue: $214.5 million, up 27% year-over-year, surpassing analyst expectations of $213.2 million.
Adjusted EPS: $0.17, beating the consensus estimate of $0.15.
GAAP Net Loss: $35.9 million, or $0.22 per share, wider than the anticipated $23 million loss.
Operating Cash Flow: $38.1 million, a significant improvement from a negative $11.0 million in the prior year.
Adjusted Free Cash Flow: $37.4 million, up from a negative $11.2 million year-over-year.
Key Metrics:
Customers with >$5,000 ARR: 10,104, a 13% increase year-over-year.
Customers with >$100,000 ARR: 1,288, up 26% year-over-year.
Dollar-Based Net Retention Rate: 122%.
Total Remaining Performance Obligations (RPO): $955.1 million, a 40% increase year-over-year.
Outlook:
Q2 FY26 Revenue Guidance: $226–$227 million, slightly below the consensus estimate of $227.16 million.
Q2 Adjusted EPS Guidance: $0.16–$0.17, in line with expectations.
Full-Year Revenue Guidance: $936–$942 million, with the midpoint slightly above analyst forecasts.
AI and Strategic Initiatives:
GitLab continues to invest in AI-driven tools, such as GitLab Duo, to enhance developer productivity and streamline the software development lifecycle. CEO Bill Staples emphasized that AI coding assistants are increasing the number of engineers by enabling more individuals to contribute to software development, rather than replacing existing roles.
Market Reaction:
Despite the positive revenue growth and improved cash flow, GitLab's stock declined by approximately 12% in after-hours trading following the earnings release, reflecting investor concerns over the wider-than-expected GAAP net loss and conservative Q2 guidance.
Analysts:
Barclays analyst Ryan MacWilliams has lowered his price target for GitLab from $58 to $47, maintaining an "Equal Weight" rating following the company's recent earnings. While the platform continues to show solid Ultimate adoption and improved profitability, MacWilliams notes that slower net new customer growth, the decision to offer GitLab Duo Essentials for free to Premium and Ultimate customers, and a weaker-than-expected revenue increase have dampened investor sentiment. He attributes GitLab’s more cautious growth outlook to a challenging macro environment and greater buyer hesitancy, though he also highlights the company’s continued operational discipline and profitability gains as positives.
Bernstein analyst Peter Weed reduced his price target from $76 to $70, but reiterated an "Outperform" rating. He observed that GitLab narrowly beat revenue expectations in the first quarter—the slimmest beat to date—and, for the first time, did not raise its full-year guidance. Weed sees this as a situational weakness rather than a broader issue.
BTIG analyst Gray Powell also lowered his price target from $86 to $67, while maintaining a "Buy" rating. He believes GitLab delivered solid Q1 results and held its revenue forecast steady, though investors were hoping for a more substantial increase. Powell points out that underlying metrics like CRPO (Current Remaining Performance Obligations) and CRPO bookings were strong, and that management’s commentary on the macroeconomic landscape and federal spending was encouraging.
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Oracle (ORCL)
Financial Highlights:
Revenue: $15.9 billion, an 11% year-over-year increase, exceeding the consensus estimate of $15.6 billion.
Adjusted EPS: $1.70, beating the forecast of $1.64.
Cloud Infrastructure (IaaS) Revenue: $3.0 billion, up 52% year-over-year.
Total Cloud Revenue (IaaS + SaaS): $6.7 billion, a 27% increase from the previous year.
Remaining Performance Obligations (RPO): $138 billion, up 41% year-over-year, indicating strong future revenue visibility.
Fiscal 2026 Outlook:
CEO Safra Catz projected significant growth for fiscal 2026:
Total Cloud Growth: Expected to accelerate from 24% in FY25 to over 40% in FY26.
Cloud Infrastructure Growth: Anticipated to increase from 50% in FY25 to over 70% in FY26.
RPO: Projected to more than double, reflecting a robust sales pipeline.
Market Reaction:
Following the earnings release, Oracle's stock surged over 13%, reaching a record high of $199.86.
Analysts:
UBS analyst Karl Keirstead lifted the price target from $200 to $225, maintaining a "Buy" rating. While broader market conditions have challenged many software firms, Oracle delivered 11% revenue growth, 8% license growth, and raised its growth forecast for FY 2025/26. Keirstead believes that the increased revenue guidance offsets the risk of margin pressure.
Evercore ISI’s Kirk Materne raised his target from $180 to $215 and reaffirmed his "Outperform" rating. He noted strong top- and bottom-line performance and highlighted that Oracle raised its FY 2025/26 revenue forecast from $66 billion to $67 billion, implying 16% constant-currency growth. Management is also projecting over 20% growth for FY 2026/27. Materne sees the risk-reward profile improving in the second half of the year, with Oracle well-positioned to benefit from ongoing demand in cloud and AI.
Jefferies analyst Brent Thill also raised his target from $200 to $220, keeping a "Buy" rating. Oracle exceeded already high expectations, and the projected 100%+ increase in RPO (Remaining Performance Obligations) underscores the breadth of AI-driven demand. Thill expects Oracle’s cloud revenue growth to accelerate meaningfully in the upcoming fiscal year.
Bank of America analysts increased their target from $156 to $220, but maintained a "Neutral" rating. They called the 14% SaaS growth (in constant currency) behind the 27% cloud subscription growth "encouraging" and believe it aligns Oracle’s performance more closely with other application software peers. While the RPO outlook is impressive and OCI and AI pipelines are growing, they also noted that significant investments could weigh on gross margins, making profitability trends uncertain.
J.P. Morgan analyst Mark Murphy raised his target from $135 to $185 and kept a "Neutral" stance. He highlighted the company’s continued momentum in AI and the optimistic tone from management for FY 2025/26 and beyond. While recognizing Oracle’s achievements in the AI space, he flagged valuation as a reason for caution.
Piper Sandler’s Brent Bracelin moved his target from $130 to $190, maintaining a "Neutral" rating. He said Oracle has entered a new era of enterprise relevance not seen since the dot-com boom. While growth visibility is improving, Bracelin remains cautious due to capital intensity risks that could expand net debt and squeeze margins, potentially increasing volatility and limiting multiple expansion.
Stifel analyst Brad Reback raised his target from $150 to $180, holding a "Hold" rating. Oracle beat both revenue and EPS expectations in Q4 and raised its full-year revenue forecast above $67 billion. He acknowledged the growth acceleration but warned that operating income growth may lag, and the company might need to raise capital to fund higher investment levels.
Morgan Stanley’s Keith Weiss maintained both his "Equal Weight" rating and $175 target, noting that although Oracle expects RPO to rise more than 100% in FY 2025/26, the quarterly growth came in below the five-year average, suggesting a more measured outlook.
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Restoration Hardware (RH)
Financial Highlights:
Adjusted EPS: $0.13, surpassing the anticipated loss of $0.07.
Revenue: $814 million, a 12% increase year-over-year, though slightly below the $818 million forecast.
Adjusted Operating Margin: 7.0%
Adjusted EBITDA Margin: 13.1%
Free Cash Flow: $34 million
Strategic Initiatives:
Supply Chain Realignment: RH is reducing its reliance on Chinese manufacturing, expecting imports from China to decrease from 16% in Q1 to 2% by Q4. The company plans for 52% of its upholstered furniture to be produced in the U.S. and 21% in Italy by the end of fiscal 2025.
International Expansion: The company is experiencing strong demand in Europe, with RH England's gallery demand up 47% and online demand up 44% in Q1. RH Munich and RH Dusseldorf also saw a 60% increase in demand.
Product Launch Delay: Due to tariff uncertainties, RH has postponed the launch of a new concept from the second half of 2025 to spring 2026.
Outlook:
Q2 2025 Revenue Growth: Expected to be between 8% and 10%.
Fiscal 2025 Revenue Growth: Projected at 10% to 13%.
Fiscal 2025 Adjusted EBITDA Margin: Anticipated to be between 20% and 21%.
Market Reaction:
Following the earnings release, RH's stock surged by approximately 20% in premarket trading, reflecting investor optimism despite challenges such as tariff impacts and a sluggish housing market.
Analysts:
Bank of America analyst Curtis Nagle has raised the price target for RH from $180 to $200 but maintains an “Underperform” rating on the stock. Following a revenue miss in the first quarter but a higher EBIT margin, the analyst has increased his revenue forecast for fiscal year 2025 by 1.1 percent to $3.54 billion, as supply is expected to ramp up in the second half of the year. The EPS forecast has been raised by 25 percent to $11.12. With its unchanged revenue guidance, RH is now setting “a high bar,” making the stock a “show-me” story.
What's Coming Up This Week
Monetary Policy and Data in Focus
Markets are entering a pivotal week, with investor attention firmly on upcoming central bank meetings. Decisions from the U.S. Federal Reserve and the Bank of Japan are expected to provide crucial signals on the future path of interest rates and broader economic conditions.
In addition, a range of important economic indicators — including inflation data and consumer confidence figures — will play a key role in shaping market sentiment and expectations over the coming weeks.
Together, these developments could set the tone for global equities, currencies, and bond markets as the second half of the year unfolds.
Tuesday, June 17
U.S. Retail Sales (May): Expected to show a 0.6% decline, primarily due to reduced auto sales. This data will provide insights into consumer spending trends.
U.S. Industrial Production (May): Offers a snapshot of manufacturing and overall industrial activity.
NAHB Housing Market Index (June): Reflects builder confidence in the housing market.
Earnings Reports: Companies such as Jabil Inc. (JBL) and Wiley (WLY) are scheduled to release earnings.
Wednesday, June 18
Federal Reserve Interest Rate Decision: The Fed is expected to maintain current interest rates. However, attention will be on the Summary of Economic Projections and any signals regarding future rate cuts.
FOMC Press Conference: Chair Jerome Powell will provide insights into the Fed's outlook on inflation, employment, and economic growth.
U.S. Housing Starts & Building Permits (May): Indicators of construction activity and housing market health.
Earnings Reports: Companies including Korn Ferry (KFY) and GMS Inc. (GMS) are set to announce earnings.
Thursday, June 19
Juneteenth Holiday: U.S. stock and bond markets will be closed in observance of Juneteenth.
Bank of England Interest Rate Decision: The BoE is anticipated to hold rates steady, but any commentary on future policy will be closely watched.
Earnings Reports: Smith & Wesson Brands (SWBI) is scheduled to report earnings.
Friday, June 20
Philadelphia Fed Manufacturing Index (June): Provides a regional view of manufacturing activity and sentiment.
U.K. Retail Sales (May): Offers insights into consumer spending patterns in the U.K.
Earnings Reports: Major companies like Kroger (KR), CarMax (KMX), and Darden Restaurants (DRI) will release earnings, shedding light on consumer behavior and retail trends.
Ongoing Events
G7 Summit in Canada: Global leaders are convening to discuss pressing issues, including the escalating tensions between Israel and Iran, global trade dynamics, and economic policies. Outcomes from this summit could have significant market implications.
Geopolitical Developments: The ongoing conflict between Israel and Iran continues to influence oil prices and market volatility. Investors are monitoring the situation closely for any signs of escalation or resolution.
Disclaimer: This content is for informational and educational purposes only and does not constitute financial advice. It does not consider your personal objectives, financial situation, or needs. You should consider whether the information is appropriate for your circumstances and seek professional advice before making any investment decisions. Investing in stocks carries inherent risks, and the application of any strategy may not eliminate the risk of loss. Market conditions, volatility, and unforeseen events can impact outcomes, and past performance is not indicative of future results.
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