Directionless trading seen into month and quarter-end

Asia market update: Directionless trading seen into month and quarter-end; US/Iran to talk in Qatar, but will markets be impacted?; CN PMIs generally flat in Jun; New BOJ ‘reflationist’ board member Sato in focus.

General trend and developments

-The Japanese Yen remains slightly offered amid quarter-end and Gotobi. Sato’s comments are now keenly awaited, especially ahead of the next BOJ decision [Jul 31st]. However, Japan 2-year bond traders seem unfazed given the stronger demand at auction.

-The PBOC continued to use its overnight reverse repo tool to support quarter-end liquidity demand.

-Quarter-end deadlines are, also, a focal point for fund managers.

-Recall, Australia’s ASIC previously put private credit funds on notice. These funds were called out to ensure their 30th June asset valuations are current, accurate & grounded in realistic assumptions.

-Mixed economic data seen in APAC.

-China Jun official PMI edged higher; The data was supported by factors including new orders.

-Japan and South Korea industrial production data miss ests in May. The South Korean data was hurt by chip and pharma output. The weakness in semiconductor output was linked to factors including base effects and volume adjustments. Supply disruptions related to the Middle East were also cited. Factors that weighed on the Japanese data included information/communication electronics equipment output.

-NZ business confidence jumped in Jun as inflation indicators improved.

-RBA’s Jun minutes looked a bit stale.

-Chinese regulatory update: Mining companies are starting to react to the new nationwide safety measures in China. Silvercorp Metals [SVM] expects to see a temporary production impact. Meanwhile, China expands bond market scrutiny from the ‘AAA’ area to high-yield.

-Shares of Samsung and Hynix rise as investors assess multi-year domestic investment plans.

-Shipping giant Maersk raised guidance, cited its expectation for global container market volume growth.

-Mizuho Bank cut its preferred 10-year fixed mortgage rate.

-Trump continued to discuss inflation as he seeks gasoline prices of ~$2.50/gallon. The President also took measures to increase the supply of fertilizer. Specifically, duties on fertilizer from Morocco were temporarily suspended. That being said, Trump has still not signed the housing affordability bill.

-US equity FUTs +0.2% to +0.4% during Asia trading.

Looking ahead (Asian-weighted focus, using Asian time zone)

-Mon June 29th: EU Jun Consumer Confidence.

-Tue June 30th: KR May Industrial Production & Retail Sales, JP May Industrial Production & Unemployment Rate, NZ Jun ANZ Business Confidence, AU RBA Meeting Minutes, CN Jun PMIs, UK Q1 GDP, (Tue night, US Jun Consumer Confidence, US May JOLTs).

-Wed July 1st: JP Q2 Tankan, KR Jun Prelim Trade Balance, EU & US Jun final S&P/HCOB Mnfg PMIs, CN June RatingDog Mnfg PMI, EU Jun Prelim CPI.

-Thu July 2nd: KR Jun CPI, AU May Trade Balance, JP 10-Year JGB Auction, EU May Unemployment Rate, (Thu night, US Jun Nonfarm Payrolls).

-Fri July 3rd: AU & JP Jun Final S&P PMIs, CN Jun RatingDog Svcs PMI, Global final Jun S&P/HCOB Services PMIs, (Note: “Independence Day (Observed)” – U.S. markets closed, reduced liquidity).

Holidays in Asia this week

-Wed July 1st: Hong Kong.

-Fri July 3rd: US Independence Day.

Headlines/economic data

Australia/New Zealand

-(AU) ASX 200 opens 'flat' at 8,830.

-(AU) Australia RBA Jun Minutes: Judged financial conditions were now ‘somewhat restrictive’.

-(AU) ACCC [Australia competition regulator] announces issuance of class exemption for global supply chain disruptions - Statement.

-(AU) APRA publishes findings of inaugural system risk stress test - Statement.

-(AU) Australia May Private Sector Credit M/M: 0.7% v 0.6%e; Y/Y: 8.2% v 8.0% prior.

-(AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 75.9 v 72.8 prior.

-(NZ) New Zealand Jun ANZ Business Confidence: 36.6 v 10.0 prior.

-(NZ) New Zealand LGFA: Targets FY27 gross bond issuance at NZ$4.66B, NZ$4.77B in FY28, NZ$4.80B in FY29.

China/Hong Kong

-(CN) Shanghai Composite opens -0.4% at 4,058; (HK) Hang Seng opens flat at 23,008.

-(CN) China MOFCOM: China, EU agrees to maintain global supply chain stability, continue consultations on trade, and solve some intellectual property issues - Statement.

-(CN) China Jun Manufacturing PMI (Gov Official): 50.3 v 50.1e (4th month of expansion).

-(CN) China's debt burden reportedly tops 300% of GDP [the figure includes household, government and corporate debt] - Press [update].

-(CN) Follow up: China May EV exports worldwide rises to 278.7K units, +48% y/y and +9% m/m.

-(CN) China PBOC overnight repo signals stronger liquidity support [inline], the tool is expected to support quarter-end liquidity conditions - Chinese press.

-(CN) China scrutinizes issuance of dollar-denominated bonds yielding over 5%; the article focuses on the high-yield market and issuance in offshore currencies - US financial press.

-(CN) AI accelerates the march of China factory robots into new sectors - FT.

-(CN) China funds shift to value plays amid tech hype – Chinese press.

-(CN) China Coast Guard: [Confirms] Conducted law-enforcement patrols in the territorial sea of Scarborough Shoal and surrounding areas.

-(CN) China's zinc smelters plan to cut concentrate use amid 'stern' losses - US financial press.

-(CN) China resumes buying US soybeans [inline] – US financial press.

-(CN) China billionaire Guo gets 30 year US prison sentence – US financial press.

-(CN) China PBOC sets the yuan mid-point at 6.8109 v 6.8175 prior.

-(CN) China PBOC Open Market Operation (OMO): Sells CNY69.5B in 7-day Reverse Repos; Net drains CNY155B v drains CNY19B prior.

-(CN) China PBOC Open Market Operation (OMO): Sells CNY600B in 1-day Overnight Reverse Repos; Net injects CNY300B v injects CNY300B prior (2nd operation in this tenor) – Statement.

Japan

-(JP) Nikkei 225 opens +0.9% at 70,151.

-(JP) Yen currency (JPY) weakens to test past 162 against USD for 40-year lows (weakest level since 1986).

-(JP) Japan Fin Min Katayama: Won't comment on specific FX levels; Action could include decisive action as agreed at recent online meeting with US; Confirmed with US bold actions are included as option.

-(JP) Japan May Preliminary Industrial Production M/M: 0.5% v 0.6%e; Y/Y: -1.7% v 1.2%e.

-(JP) Japan sells ¥2.8T vs. ¥2.8T indicated in 2-year JGB bonds’ avg yield: 1.407% v 1.3690% prior; Bid-to-cover: 4.82x v 3.70x prior.

-(JP) Japan Chief Cab Sec Kihara: Won't comment on Forex levels; Will take appropriate action on FX as necessary.

-(JP) Japan Trade Min Akazawa: China's fresh export curbs are absolutely unacceptable; Protested, demanded China rescind fresh export curbs.

-(JP) Former BoJ Official Yamamoto sees next rate hike 'probably' before December, recommends that the central bank moves quickly - US financial press.

-(JP) Japan considers new energy infrastructure leasing system – Japanese press.

-(JP) Japan and India reportedly agree on ammonia and hydrogen production - Nikkei.

-(JP) Japan's PM Takaichi to meet India's PM Modi on a '3-day visit'.

-(JP) Japan May Jobless Rate: 2.5% v 2.5%e.

-(JP) BoJ reports that new board member Sato to hold a press conference at 08:00GMT.

-(JP) JGB market participants are no longer seeing ‘notable’ supply-demand deterioration; cites Japan MOF – US financial press.

Korea

-(KR) Kospi opens +0.3% at 8,417.

-(KR) South Korea May Industrial Production M/M: -3.0% v 0.5%e; Y/Y: -0.9% v 3.6%e.

-(KR) South Korea President Lee: All South Korea ships exit Strait of Hormuz except two.

-(KR) South Korea Land Ministry: South Korea designates Dongtan, Giheung, Guri as overheating areas - Statement.

Other Asia

-(IN) India May Industrial Production Y/Y: 5.1% v 4.5%e [EU Market Close].

-(PH) Philippines May Trade Balance: -$5.5B v -$5.2Be.

-(PH) Philippines raises wages for workers in the capital region of Manila - Press.

-(TH) Thailand May ISIC Manufacturing Production Index Y/Y: -0.8% v -0.1%e.

-(SG) Singapore May M1 Money Supply Y/Y: 8.8% v 9.2% prior.

-(MY) Malaysia Second Fin Min: All core expenditure to continue as approved under 2026 budget - parliamentary comments.

North America

-(US) US Supreme Court declines to allow Trump to remove Fed Reserve Gov Lisa Cook without due process; Expands the President's ability to fire top govt officials; Backs Trump's firing of Federal Trade Commission members (split decision 5-4) [US market close].

-(US) Sens. Tim Scott and Bill Hagerty are reportedly proposing legislation aimed at securing AI supply chains; Bill would let US block AI tech from China, Russia, Iran, Cuba - Politico [US market close].

-(US) Interior Sec Burgum: Gasoline can 'absolutely' go below $3.00/g [US market close].

-(US) Pres. Trump: Gas prices coming down, fast! Report any abuses at retail level!!! President DJT - Truth Social [US market close].

-(US) Pres. Trump: Signs memorandum on after-market auto parts "freedom to fix” / right-to-repair; Oil prices are way down; The meeting in Doha may or may not be important [US market close].

-(US) Jun Dallas Fed Manufacturing Activity: 0.0 v 1.0e; New orders: 2.3 v 6.4 prior [US market close].

-(US) SMCI Super Micro offices raided in Taiwan amid expanded probe of chip smuggling - press (update) [US market close].

-(US) Nevada reports May casino gaming Rev $1.39B, +7.4% y/y, Las Vegas strip Rev $808M, +13.2% y/y [US market close].

-(US) House Speaker Johnson: Trump will not veto housing bill as the President is still deciding whether to sign - Politico [citing interview].

-(US) Commerce Sec Lutnick to deliver an updated recommendation to President Trump regarding the potential implementation of import tariffs on refined copper.

-(US) Pres. Trump: Gasoline Retailers must get their Prices down, IMMEDIATELY! They’re too high considering that Oil is...; [says] Start targeting around the $2.50 a Gallon number, and California should stop - post on Truth Social.

-(US) USTR's Greer: Welcome Switzerland's progress on trade framework - post on X.

-(US) US Dept of Education: Trump Admin is finalizing new college eligibility rules for student lending; Will place responsibility on schools to ensure graduate earning potential - WSJ.

-(US) White House: Temporary suspension of duties on fertilizer from Morocco - Fact Sheet.

-(US) US House passes bill to renew terrorism insurance program - US financial press.

-(US) Pres. Trump: It is my Great Honor to announce that I am nominating Keith E. Sonderling, the outstanding Acting United States Secretary of Labor, to be permanent - post on Truth Social.

-(BR) Brazil Jun FGV Inflation IGPM M/M: -0.5 % v -0.5%e; Y/Y: 3.2% v 3.2%e [US market close].

-(BR) Raizen reports Q4 (BRL) Net -7.33B v -2.51B y/y, Adj EBITDA 2.88B v 2.67Be, Net Op Rev 51.3B v 53.8Be.

Europe

-(EU) ECB Chief Lagarde: Not accurate to describe June move as an insurance hike; The resilience Europe has built means rate hike effects on the economy are more contained; Resilience means ECB can raise rates to address inflation without fear it become a source of financial stress [EU Market Close].

-(UK) PM Candidate Burnham (Labour): Will not announce appointments until end of leadership process; We will not leave everything to market, will use public intervention where necessary; Plans will be backed by discipline of current fiscal rules; Won’t take risks with public finances [EU Market Close].

-(DK) MAERSKB.DK Raises FY26 Underlying EBTIDA $8-10.0B, EBIT $2.0-4.0B, FCF 'at least' -$1.5B (prior: EBITDA $4.5-7.0B , EBIT -$1.5B to +$1.0B, FCF at least -$3.0B, Capex $10-11B); Citing recent sustained increase in spot market rate [EU market close].

-(EU) EU gives final greenlight for package to simplify AI rules - press [EU Market Close].

-(EU) Upcoming EU inflation data could bring July ECB rate hike back onto the table - financial press.

-(ES) Spain Econ Min Cuerpo: Extending temporary measures to limit Iran war impact on prices by three months [EU Market Close].

-(IE) Ireland May Retail Sales Volume M/M: 0.0% v 0.5% prior; Y/Y: 0.8% v 0.2% prior [EU Market Close].

-(PT) Portugal May Retail Sales M/M: 0.0% v -1.7% prior; Y/Y: 1.5% v 4.7% prior [EU Market Close].

-(UK) Jun Lloyds Business Barometer: 44 v 48e (update).

-(UK) Jun BRC Shop Price Index Y/Y: 1.2% v 1.3%e.

Middle East

-(US) Pres. Trump: Iran has requested a meeting. It will take place tomorrow in Doha! [US market close].

-(IR) Iran Dep Foreign Min Gharibabadi: Will continue to oppose and obstruct any vessels transiting Strait not specified by Tehran [EU Market Close].

-(IR) White House Press Sec Leavitt: Trump retains right to use military if needed; Trump wants peace process to play out; Confirm Witkoff and Kushner will attend Iran meeting in Doha, Qatar [US market close].

-(IL) Israel Foreign Min Saar: Our aim is peace with Lebanon [EU Market Close].

Levels as of 01:20 ET

Nikkei 225 +1.8%; ASX 200 -0.2%; Hang Seng -1.3%; Shanghai Composite +0.1%; Kospi +2.7%.

Equity S&P500 Futures +0.2%; Nasdaq100 +0.4%; DAX +0.8%; FTSE100 +0.2%.

EUR 1.1428-1.1387; JPY 162.39-161.89; AUD 0.6892-0.6865; NZD 0.5656-0.5640.

Gold -0.9% at $3,981/oz; BTC -1.1% at $59,390; WTI Crude Oil -0.8% at $70.21/bbl; Copper +0.2% at $6.1845/lbs.