Iran signage supports risk appetite, but capped by Warsh/Fed-related uncertainty

Asia Market Update: Iran signage supports risk appetite, but capped by Warsh/Fed-related uncertainty; Further monetary policy surprises are possible with multiple CBs in Asia and Europe meeting later on Thurs.

General trend and developments

-Risk assets staged a recovery in Asia as equity FUTs also recovered nearly all of their losses suffered during the afternoon US session. Markets initially took as hawkish the final sentence of new Fed Chair Kevin Warsh’s first (and very short) Statement that underscored policy makers will deliver price stability. However, during the press conference Warsh said essentially the Fed was divided, with half wanting to raise rates while half don’t. UST yields broadly fell during Asian trading hours, paring back some of the earlier spike.

-After the initially stronger dollar and higher US yields (UST 2-years up as much as 16bps in-session), various US tier 1 analysts started to release neutral to relatively dovish expectations regarding the chances of further Fed rate hikes in 2026, counter to the prevailing narrative during the US session itself. Uncertainty on Fed direction likely to be a theme going forward with Chair Warsh clearly determined to shake things up at the Fed with several task forces amid a focus on better, more current data for markets to focus on, no forward guidance and less Fed-speak.

-Risk appetite helped by Pres Trump confirming he had signed the US-Iran MOU, followed in short order by photos of Iran’s President signing the document in Iran. Oil fell back to yesterday’s multi-month lows after having spiked ~$5/bbl during the US session.

-The Kospi and the Nikkei stormed to new highs, with the Kospi +1.7% hitting 9.000 for the first time and the Nikkei taking out the 71K handle. Hang Seng went the other way, significantly underperforming Asia -1.7% with tech stocks including Alibaba weighing.

-Mild reaction in Japanese bonds, with JGB yields flat at the front end and up just slightly at the belly and long-end of the curve. Chances of a further BOJ rate hike in late July now close to zero, while September only 15.5%, down from 18.5% a day earlier, while October chances dipped to slightly below 49%. [Japan national CPI for May due out tomorrow].

-Emeco (leading mining equipment rental firm) became the latest Australian co. to note its outlook was impacted by fuel price uncertainty. The firm also stated the recent trading conditions have moderately impacted its near-term earnings.

-Nonetheless, we have continued to see more CFOs provide financial guidance, since Sunday’s US/Iran peace deal announcement. Whether or not additional companies will have enough certainty to issue quantitative outlooks will be a focal point with quarter-end approaching.

-Meanwhile, Australia’s corporate watchdog issued a warning related to private credit. Specifically, ASIC put private credit on notice ahead of 30 June valuations and reporting.

-Following the first contraction of retail sales in China since the Covid-era, China’s State Planner rolled out their third batch of already budgeted consumer-goods trade-in funds totaling CNY125B; follows the first contraction of retail sales in China since the end of the pandemic restrictions in Dec, 2022.

-New Zealand better GDP figures confirmed for Q1 as inline or even better than expectations, with upward revisions to boot amid stronger manufacturing, business services and wholesale trade.

-CEO Tim Cook said that it was '“unavoidable” that Apple would have to raise prices due to surging memory chip and storage costs - likening the situation to a “100-year flood”.

-Intel likely to get a further kick in US trading tonight as Pres Trump confirmed that Apple has agreed for Intel to design and build its chips in the US.

-Continued fall-out for Anthropic following its Fabel 5 withdrawal, with JPMorgan cutting off access for its Hong Kong staff to all Claude AI models.

-The UK may soon see a challenge against PM Starmer’s unpopular leadership from within the Labour party itself if Andy Burnham succeeds in becoming an MP again by staving off the challenge from Reform and winning the Makerfield by-election later on Thursday, UK time. (Results expected Friday).

-US equity FUTs +0.7% to +1.1% during Asia trading.

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

-Thu Jun 18th: ID Rate Decision, TW Rate Decision, PH Rate Decision (Thu night, UK BoE Rate Decision).

-Fri Jun 19th: JP May National CPI, (Note: Juneteenth — US markets closed, reduced liquidity).

Holidays in Asia this week

-Tue Jun 16th: Indonesia.

-Wed Jun 17th: Malaysia.

-Fri Jun 19th: China, Hong Kong, Taiwan, US.

Headlines/economic data

Australia/New Zealand

-(AU) ASX 200 opens -0.3% at 8,937.

-(NZ) New Zealand Q1 GDP Q/Q: 0.8% v 0.8%e; Y/Y: 1.5% v 1.0%e.

-(AU) Australia plans A$3.5B tax concessions for small businesses & startups (update).

-(AU) Australian Securities & Investments Commission [ASIC]: ASIC puts private credit on notice, ahead of 30th June valuations and reporting.

-(NZ) RBNZ: Opens talks on crisis preparedness for deposit takers.

-(NZ) New Zealand to exempt health and life insurers from climate reporting - financial press.

China/Hong Kong

-(CN) Shanghai Composite opens -0.3% at 4,094; (HK) Hang Seng opens -0.7% at 24,145.

-(CN) China State Planner Spokesperson: Have issued two further batched consumer-goods trade-in funds of CNY125B.

-(HK) HKMA leaves rates unchanged at 4.00% (as expected), tracking the US Fed.

-(CN) Recent shift announced by the PBOC signals structural change in financing; notes the financing mix is moving away from bank loans towards equities and bonds – Chinese press.

-(CN) China May Swift Global Payments (CNY): 2.8% v 2.9% prior.

-(CN) PBOC: The interbank market data repository launches in Shanghai, China.

-(CN) MSCI will delete XINXIANG RICHFUL LUBE A (MSCI Security Code: 18069.01 / RIC: 300910.SZ) from the MSCI China All Shares and MSCI China A Onshore Indexes and from relevant non-market capitalization weighted indexes and custom indexes as of the close of June 19, 2026 (effective June 22, 2026); cites EU sanctions on Russia.

-(HK) HKMA: Monetary, financial markets continue to operate in orderly manner.

-(CN) China PBOC sets the yuan mid-point at 6.8130 v 6.8096 prior.

-(CN) China PBOC Open Market Operation (OMO): Sells CNY248B in 7-day Reverse Repos; Net injects CNY60B v injects CNY261B prior.

Japan

-(JP) Nikkei 225 opens +0.4% at 70,164 (record intraday high).

-(JP) Japan Chief Cab Sec Kihara: No comment on FX levels; Must look comprehensively at such impact of weak yen.

-(JP) Bank of Japan (BOJ) Dep Gov Himino to deliver half-year report [semi-annual testimony on monetary policy] to the National Diet on Friday, 19th June, 2026.

-(JP) Japan pension funds move to foreign bonds in record amounts – Nikkei [update].

-(JP) Tokyo aims for more affordable housing in Shibuya district with zoning rule changes - Nikkei (update).

-(JP) Bank of Japan (BOJ) Results related to today's outright bond buying operations:.

-(JP) BOJ Outright Bond Purchase Operation for 1~3 Years; 3~5 Years: 5~10 Years and 10~25 Years; (Inline with planned amounts for Q2, 2026).

-(JP) Japan releases weekly flows data [period ended Jun 12th]: Foreign buying of Japan equities: -¥785.0B v -¥700.6B prior; Japan buying of foreign bonds: ¥382.6B v ¥212.1B prior.

Korea

-(KR) Kospi opens +0.2% at 8,884

-(KR) Follow up: South Korea to closely monitor financial markets for the next 24 hours to stabilize financial markets - Statement.

-(KR) Bank of Korea [BOK] Senior Deputy: To pay attention to possible volatility increase in markets; To monitor financial, forex market volatility - comments in meeting.

-(KR) South Korea Finance Ministry to apply zero tariffs on LNG, LPG as part of quota scheme to tackle inflation; effective during H2 - US financial press.

-(KR) South Korea FSS issues consumer alert on single-stock leverage products - Statement.

Other Asia

-(MY) Malaysia PM Anwar: Discussed with Russia's Pres Putin long-term oil and energy supply as well as bilateral trade using local currencies.

-(TW) Taiwan said to be planning up to NT$210B unmanned vehicle budget approval - Taiwanese press.

-(TW) Taiwan President Lai: Taiwan's future must be decided by it's 23 million people - Foreign Media Reception.

-(MY) Bursa Malaysia notes slight delay in price feed; Update to follow soon.

-(ID) Indonesia Finance Ministry: Secures $17B from Asia Infrastructure Investment Bank for 2025-29 projects.

-(IN) India May Unemployment Rate: 5.5% v 5.2% prior [EU market close].

North America

-(US) FOMC leaves target rate unchanged between 3.50-3.75% range; As expected; Removes reference for additional rate adjustments in very short statement [US market close].

-(US) FOMC Summary of Economic Projections (SEP) for June: Expects rates to be held or hiked 25bps in 2026 (prior cut of 25bps); Raises PCE forecast for 2026, 2027 and 2028 [US market close].

-(US) Fed Chair Warsh: Inflation is well ahead of the Fed's 2% goal; Forward guidance is not well-suited to current policy stance; Confirms that he did not offer projections today; Discloses five task forces to tackle various subjects - post rate decision press conf [US market close].

-(US) Goldman Vice Chairman Kaplan (former Fed President of Dallas): "Wise" for US Fed to act by fall if inflation doesn't cool - Interview on BTV.

-(US) WSJ Timiraos : Fed Chairman Warsh overhauls how the Fed talks [inline] and keeps markets guessing on rates.

-(US) According to JPMorgan Asset Management analysts, the Fed is unlikely to adjust rates in 2026 – US financial press.

-(US) INTC Pres. Trump: [Confirms] Apple has agreed to work with Intel to design and build its chips in America - post on Truth Social.

-(US) JPM To cut-off of Anthropic access for it's Hong Kong staff; as a result these workers are now unable to access Claude models from a 'drop-down' list of approved large language models (LLMs) - FT.

-(US) NHC issues update on Tropical Storm Arthur: The Tropical Storm Warning is discontinued west of High Island, Texas.

-(US) NASA, Relativity Space unveil public-private partnership agreement.

-(US) Prometheus Hyperscale yesterday received unanimous Conditional Use Permit approval from the Uinta County Board of Commissioners for its flagship data center campus near Evanston, Wyoming.

-(US) Los Angeles warehouse fire prompts thousands to shelter in place – NYT [update].

-(US) Midjourney [AI co.] announces full body ultrasound machine - US financial press.

-(US) US Pres Trump: It's alright the Fed held rates, whatever; Reiterates the Iran deal will be signed in the next 48hrs; Iran signing is in the final form, but not yet determined; Views the USMCA as possibly expiring immediately; Would prefer to not have a new USMCA agreement, but would do it [US market close].

-(US) May Pending Home Sales M/M: 3.8% v 0.9%e; Y/Y: 2.1% v 2.0%e [US market close].

-(US) May Advance Retail Sales M/M: 0.9% v 0.6%e; Retail Sales (Ex-auto) M/M: 0.8% v 0.6%e [US market close].

-(US) Atlanta Fed GDP Now: Raises Q2 GDP estimate from 2.83% to 3.0% [US market close].

-(US) MBA Mortgage Applications w/e Jun 12th: -3.8% v +10.8% prior [US market close].

-(US) AAPL *CEO Cook: To 'unavoidably' raise prices due to surging memory chip and storage costs; Rising costs for memory are a '100-year flood'; Declined to provide details on the timing of price hikes - WSJ interview.

-(US) Apr Business Inventories Business: 0.5% v 0.5%e [US market close].

-(BR) Brazil Central Bank (BCB) cuts Selic target rate by 25bps to 14.25%; As expected; Unanimous decision.

-(BR) Brazil Apr Economic Activity Index (Monthly GDP) M/M: 0.5% v 0.6%e; Y/Y: 0.9% v 1.6%e [US market close].

-(CO) Pres. Trump: Colombia Presidential Candidate, “El Tigre (THE TIGER),” Abelardo de la Espriella, is a Smart, Stro... - post on Truth Social.

-(AR) Argentina May Budget Balance (ARS): 192.4T v 632.8B prior.

Europe

-(UK) Policy Chairman of London Corp 'Chris Hayward': The London Stock Exchange needs to make regulations as flexible as possible for Chinese companies to list in the city and boost dual listings.

-(RU) Mayor: Drone attack hits Moscow oil refinery - Tass; Local Authorities: Russia attacks Kyiv with missiles.

-(DE) German Chancellor Merz: Saw positive results from recent G7 Leader Summit; China's currency is undervalued by 20-30%; This needs to be discussed [EU market close].

-(IE) Irish Central Bank: Cuts FY26 GDP est to -2.7% vs. +1.3% prior, FY27 GDP +6.5% vs. +4.3% prior, FY28 GDP +4.0% vs. 5.2% prior.

-(UK) 7201.JP UK Government in advanced talks with Nissan about financial support for carmaker's Sunderland plant plans - Sources.

-(NL) Netherlands May Unemployment Rate: 3.9% v 4.0%e.

-(UK) Daily Baltic Dry Bulk Index -0.6% at 2,653 points.

-(EU) ECB's Sleijpen (Netherlands): ECB must look beyond immediate effects of shock; Inflation expectations are broadly anchored [EU market close].

-(G7) G7 leaders joint statement: Tasking Fin Mins and central bankers to discuss AI; Call for coordinated action on global imbalances [EU market close].

Middle East

-(IR) US Official: Iran MOU was signed on Wednesday by Trump and Iran President Pezeshkian; confirms Iran MOU was signed digitally on Sunday by JD Vance and Iran Speaker Qalibaf and witnessed by Trump.

-(G7) Pres Trump: We reached an agreement with Iran on Sunday; Reiterates that Iran deal will open Strait of Hormuz; Iran agreement gets everything we wanted and more; We'll be distributing MOUS so you can read it; If Iran deal is not done in 60 days then we'll go back to bombing [US market close].

-(IR) Iran Foreign Min Spokesperson: Text for MOU has been finalized; Both the US and Iran presidents have signed [US market close].

-(IR) President Trump: I just signed [Iran] MOU; MOU is signed, yeah; We signed it in Versailles, [France].

-(IR) IRNA publishes photos showing Iranian President Pezeshkian signing Iran-US memorandum of understanding.

-(IR) US Senior official: Iran is already starting to lift its blockade of the Strait; Seeking final deal in 60 days but can be mutually extended; MOU text has not changed since Sunday [US market close].

-(IR) Pres Trump: Iran MOU is not final; Report on $300B fund is false; Strait of Hormuz is already partially open, will open in full; If I do not like what I see, we will strike again; To discuss Iran deal details at press conference today [US market close].

-(IR) Iran Foreign Ministry Spokesperson: Signing could be done by US and Iran Presidents, idea still under review [EU market close].

Levels as of 01:20 ET

Nikkei 225 +1.9%; ASX 200 -0.3%; Hang Seng -1.8%; Shanghai Composite -0.1%; Kospi +1.7%;

Equity S&P500 Futures +0.7%; Nasdaq100 +1.1%; DAX -0.2%; FTSE100 -0.6%.

EUR 1.1527-1.1500; JPY 160.75-160.52; AUD 0.7042-0.7011; NZD 0.5799-0.5764.

Gold +1.5% at $4,321/oz; BTC -2.9% at $63,832; Crude Oil -2.7% at $74.71/bbl; Copper +0.5% at $6.3890/lbs.