Israel-Iran conflict intensifies with new missile attacks

Good morning, as the strikes between Israel and Iran continue, with neither country showing signs of backing down anytime soon. We’ll bring you details of the strikes and reaction to them. And here’s what else we’re covering:

• Renault chief executive steps down

• Inside Iran’s Fordow nuclear facility

• Japan’s surging long-term borrowing costs

The conflict between Israel and Iran escalated further on Sunday, with both sides trading missile strikes for the third day in a row.

What were the targets of Israel’s attack? Israel appeared to widen its attack, striking missile infrastructure in the west of the country and hitting targets in the east. Tehran shook with multiple large explosions, including one near the foreign ministry building, signalling a serious escalation.

In response, Iran launched another wave of missile attacks on cities across Israel that same evening, continuing the tit-for-tat violence that has left the region on edge.

This latest round of strikes marks a sharp intensification of the conflict, moving beyond previous limits and raising concerns about how far this could spiral. Civilians on both sides are undoubtedly feeling the strain as the violence continues. The international community is watching closely, hoping for some sign of de-escalation but bracing for further instability as the days go on.

What has the reaction been? US President Donald Trump called for a deal between the two nations, emphasising that “many” calls and meetings were under way that he believed would lead to peace “soon.”

Meanwhile, Israeli Prime Minister Benjamin Netanyahu took a tougher stance, warning that Israel was prepared to launch attacks that Iran “cannot even imagine”.

On the other side, Iranian President Masoud Pezeshkian issued a stern warning, threatening Israel with a “more painful” response if the attacks continue.

We’ve got more coverage below:

• Netanyahu’s warning: “We’ll do what we need to do” the Israeli premier said in response to a question about blockblockinating Iran’s supreme leader Ayatollah Ali Khamenei.

• Saudi Arabia’s oil output: Israel’s unexpected strike on Iran has raised concerns about potential disruptions to Middle East oil supplies, putting the Opec+ cartel’s recent decision to boost crude production under intense scrutiny.

• Israel’s goals in Iran: While the strikes have not ended, “it looks like Israel is achieving its goals”, writes John Sawers, former chief of MI6.

And this is what else we are watching today and over the week:

• Retail sales: China releases its retail sales, industrial output and house price index data for May today.

• Economic rates: The Bank of Japan’s Monetary Policy Committee is set to vote on interest rates tomorrow, ahead of an official inflation update Friday.

• G7 summit: With one day left in the summit, talks that were meant to centre on trade and US support for Ukraine have been largely overshadowed by escalating tensions between Israel and Iran. Here are five factors to watch in the coming days.

Five more top stories

1. Renault chief executive Luca de Meo steps down to take the helm at Kering, where he will lead efforts to turn around the struggling French luxury group, according to people briefed on the plan.

2. A Pentagon review of Aukus has rattled allies, with some seeing it as US pressure on Australia to spend more on its own defence. US Congressman Joe Courtney said he was stunned by news of the review. “This was an absolute thunderbolt,” he told the Financial Times.

3. Mark Carney is hosting G7 leaders in Canada’s Rocky Mountains this week, as escalating Middle East tensions and the unpredictability of President Donald Trump loom over his bid for a unified summit. Officials fear a repeat of past clashes, with one likening preparations to “rolling out the red carpet for Godzilla”.

4. China’s corporate bond market defaults have fallen to near zero this year, according to data from S&P Ratings. China has seen only one first-time corporate bond default in its $4 trillion onshore market in 2025 — a sharp drop from 16 in 2024.

5. The manhunt continues for Vance Boelter, the suspect in the killing of Minnesota state representative Melissa Hortman and her husband on Saturday. The FBI has offered a $50,000 reward for information leading to his arrest, warning that Boelter is armed and dangerous.

News in-depth

Inside Iran’s heavily fortified Fordow nuclear facility, new reporting, satellite ***ysis, and visual reconstructions show how the underground site has become central to Tehran’s nuclear ambitions — and a major challenge for Israeli military planners. Look inside.

We’re also reading . . . 

• Final words: A deathbed letter from English designer Malcolm McLaren offers a rare, personal glimpse into his fraught partnership with punk pioneer Vivienne Westwood.

• Oil prices: With geopolitical tensions sparking a surge in oil prices and market volatility, Gillian Tett asks whether this is just the start of a much bumpier summer for investors?

• Game time: From poker tables to golf courses, executives are turning to sports to sharpen decision-making, read opponents and manage risk.

Chart of the day 

A surge in long-term borrowing costs, high inflation, and a string of weak debt auctions have intensified pressure on the Bank of Japan ahead of this week’s policy meeting. Yields on 30-year bonds hit a record 3.2% last month — driven by a buyer strike among domestic life insurers — and remain elevated near 2.9%, posing a challenge for the BoJ as it gradually tapers its bond-buying programme.

Take a break from the news

On Taquile, a remote island in Peru’s Lake Titicaca, it’s not money or status that wins hearts, but craftsmanship. Stanley Stewart embarks on a journey across Southern Peru, from the grand city of Arequipa through the Colca Canyon to Lake Titicaca, ultimately reaching Taquile. Isolated by distance, the island has preserved a unique culture where a man’s knitting skills — particularly the crafting of woolly hats — are central to his romantic appeal.