Kospi surges post-holiday as US equity FUTs softer amid US-Iran deal uncertainty

Asia Market Update: Kospi surges post-holiday as US equity FUTs softer amid US-Iran deal uncertainty; RBNZ rates tomorrow, BOK Thurs.

General trend and developments

-Kospi roared back after yesterday’s holiday, up +3%, replicating the Nikkei’s performance yesterday as Japanese equities today took a breather from the stellar gains over the past three trading sessions (Thu, Fri, Mon). Taiwan’s equity market continued its TSCM-led surge at the open, overtaking India to be the fifth largest exchange in the world by market cap.

-Nasdaq and S&P500 FUTs softer in Asia, nearly back to the top of Monday’s opening gap on the optimistic weekend news out of the Middle East. Softer equities amid creeping uncertainty on US-Iran deal and kinetic action reemerging on the ground. US CENTCOM stating that US forces conducted “self-defense strikes” in Southern Iran on Monday, hitting targets including missile launch sites and Iranian boats attempting to place mines. CENTCOM stated the Hormuz incident does not violate the ceasefire.

-Further detail tricked out overnight amid the US holiday that Iran is reportedly prepared to remove highly enriched uranium from its territories - perhaps to China, while the US-Iran agreement draft stipulates a 30-day period for resuming navigation in the Strait of Hormuz and also allows extending the ceasefire between US and Iran for more than 60 days [starting time frame uncertain]. Pres Trump posted that negotiations with Iran proceeding nicely and “will either be a great and meaningful one, or there will be no deal at all”, as Pakistan’s senior army commander confirmed that an US-Iran agreement is close to being reached. Iranian officials were more circumspect, agreeing that while a framework has been reached with the US there is no certainty an agreement is imminent. Adding they will not take ”tolls“ on the Strait of Hormuz, instead framing it as an '”environmental surcharge“ to finance marine environmental protection and navigational support.

-Sec of State Rubio confirmed what most had already presupposed after the optimistic comments out of the US over the weekend, that Iran negotiations “will take a few days.”

-Japan PM Takaichi confirmed will compile an extra budget of over ¥3.0T, as widely speculated, but was careful to add will not issue new deficit financing bonds - at least in this financial year...

-Japan pushing for an economic partnership with Mercosur (South America’s Western and Central regions), in what would hopefully be substantially less time than the >25 years the European Union took to achieve. With Japan after lithium and rare earths in particular progress should be quicker without the complicating factor of EU-Mercosur both having been agricultural export powerhouses.

-A 6.7 Mag earthquake rocked the northern Antofagasta region, the mining-intensive area of Chile. Some impact on copper mining giant Codelco from the quake, with mine inspections underway.

-Continued uncertainty over Samsung’s strike issues, as one of its smaller unions plans to file for a court injunction seeking to halt a vote on the tentative wage agreement between the company and its largest union. [Comes on top of a shareholder group threatening to also file an injunction if an "invalid deal" is struck].

-Huawei’s announcement of its new Kirin chips yesterday, using new scaling laws and Logicfolding chip design to hopefully reach 1.4nm by 2031 helping propel China chip giants SMIC and Hua Hong higher. (cf TSMC planning to mass produce 1.4nm by 2028).

-Sri Lanka Rupee +1% as its central bank unexpectedly large 100bp hike continues the trend of larger than expected monetary tightening out of Asia, after last week’s 50bps hike by the Indonesia Central Bank (BI). We are currently pondering if there could also be hawkish surprises at this week’s BOK and RBNZ meetings (Market probabilities currently only see a 20% chance of a rate hike for RBNZ, while a majority of economists (30/32) see Bank of Korea (BOK) also holding rates at 2.50% this week.

- US equity FUTs +0.6% to +0.8% during Asia trading.

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

-Tue May 26th: (Tue night, US May Consumer Confidence).

-Wed May 27th: AU Q2 CPI, RBNZ Rate Decision, KR Apr Retail Sales.

-Thu May 28th: KR Rate Decision, NZ May ANZ Business Confidence, AU Q1 Private Capex, NZ Annual Budget Release, (Thu night US Q1 GDP (2nd read), US Apr Core PCE).

-Fri May 29th: KR Industrial Production, NZ May Biz Confidence & Outlook, JP May Tokyo Core CPI, JP Apr Retail Sales & Industrial Production.

Holidays in Asia this week

-Mon May 25th: Hong Kong, South Korea, (Mon night US markets closed).

-Wed May 27th: Indonesia, Malaysia, Singapore.

-Thu May 28th: India, Indonesia.

Headlines/economic data

Australia/New Zealand

-(AU) ASX 200 opens -0.1% at 8,692.

-(AU) Australia Foreign Minister: Want quad to be as strong, effective as we can make it.

-(AU) Australian LNG union cancels Ichthys strike plans (owned by Inpex in Northern Territory) for May 27-28th.

-(AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 66.1 v 66.4 prior.

China/Hong Kong

-(CN) Shanghai Composite opens -0.4% at 4,137; (HK) Hang Seng reopens flat at 25,622.

-(CN) Solid-state EV batteries hit another ‘major’ milestone in China – Electrek [update].

-(CN) China Ministry of Finance and Ministry of Emergency Management allocated CNY160M for natural disaster relief - Finance Ministry Statement.

-(CN) Follow up: China Pres Xi said to have 'railed' against Japan's 'remilitarisation" at the China-US Summit - FT (update).

-(CN) China April EV exports 278K units, +40% y/y.

-(CN) China financial liquidity seen easing to balanced level [inline] – Chinese press.

-(CN) China 'change in math' on carbon emissions masks growth ; cites report- FT [update].

-(CN) China retail investors ‘rush’ to find alternatives after officials increase crackdown – US financial press [update].

-(CN) China PBOC sets the yuan mid-point at 6.8288 v 6.8318 prior (strongest level since February 15th, 2023).

-(CN) China PBOC Open Market Operation (OMO): Sells CNY249B in 7-day Reverse Repos; Net injects CNY249B v injects CNY257B prior.

Japan

-(JP) Nikkei 225 opens +0.1% at 65,247.

-(JP) Another Japanese-related ship to have transited through the Strait of Hormuz - Yomiuri.

-(JP) Japan SMEs struggle to deal with declining supplies of key materials such as naphtha – Nikkei.

-(JP) Japan, Mercosur to begin Economic Partnership Agreement (EPA) talks - Kyodo.

-(JP) Japan Trade and Foreign Ministry officials visit Russia (as expected) - RIA.

-(JP) Bank of Japan (BOJ) Dep Gov Himino: Market views rises in long-term interest rates reflect global concerns about inflation; Vital market trusts BOJ to control inflation - parliament testimony.

-(JP) Japan Nikkei 225 extends pullback, drops by >0.5%.

-(JP) Japan Fin Min Katayama: Volatility in oil markets affecting Forex, financial markets.

-(JP) Japan Fin Min Katayama: Will use ¥513.5B from reserve fund for utility aid.

-(JP) Japan's Trade/Industry Min Akazawa: Not time to ask for more power-saving than usual.

-(JP) BOJ Himino scheduled to appear in parliament from 10:15am [local time] / 01:15 GMT.

-(JP) Japan Dep Chief Cab Sec Ozaki: Aware of reports on consumption tax; Nothing decided yet, will refrain from prejudging.

Korea

-(KR) Kospi reopens +2.8% at 8,071 (fresh record high).

-(KR) Majority of economists (30/32) see Bank of Korea (BOK) holding rates at 2.50% this week.

-(KR) Follow up: South Korea Pres Lee; To accelerate efforts to build nuclear-powered submarine - Korea press.

-(KR) South Korea to monitor investors' overseas private credit exposure - US financial press.

-(KR) South Korea and China hold 3rd round of export control talks (as expected) – Xinhua.

-(KR) South Korea Military: North Korea fires missile [unidentified projectile] toward the Yellow Sea - Yonhap [citing South Korea's joint Chiefs of Staff].

Other Asia

-(SL) Sri Lanka Central Bank (CBSL) raises Overnight Rate by 100bps to 8.75%; more-than-expected.

-(ID) Indonesia Rupiah hits fresh record low of IDR17,765/USD.

-(PH) Philippines Apr Budget Balance (PHP): +31.4B v -349.7B prior.

-(VN) Vietnam's Hoa Phat (top steelmaker) said to be interested in tapping into country's biggest iron ore mine - press.

North America

-(US) Sec of State Rubio: Iran negotiations will take a few days - To reporters in India.

-(US) Pres. Trump: The Enriched Uranium (Nuclear Dust!) will either be immediately turned over to the United States to ... - post on Truth Social.

-(US) Readout issued for Sec of State Rubio call with Russian Foreign Minister Lavrov - US Department of State.

-(MX) Mexico Q1 Current Account Balance: -$15.9B -$15.5Be (update) [US Market Close].

-(US) US activist holder seeks removal of Japan drugstore Cawachi's [2664.JP] CEO.

-(CA) Canada PM Carney: Negotiating a free trade deal with India.

-(CL) 6.8 mag earthquake strikes Antofagasta, Northern Chile - GFZ.

Europe

-(RU) Russia's Foreign Ministry statement: To launch a "series of systematic strikes" on Ukrainian defense industrial facilities, "decision-making centers," and command posts in Kyiv. [US Market Close].

-(UR) Ukraine President Zelenskiy: Little progress with US on anti-missile defense [US Market Close].

-(EU) ECB Villeroy reiterated the ECB has not yet seen second-round inflation effects – US financial press [update].

-(UK) Top EU Official: UK could join €4B EU start-up fund this year - FT.

-(UK) May BRC Shop Price Index Y/Y: 1.2% v 1.1%e.

-(FR) National Rally's Jordan Bardella would beat former PM Edouard Philippe with 52% of votes in French Presidential runoff - Odoxa poll.

Middle East

-(IL) Israel Central Bank (BOI) cuts Base Rate by 25bps to 3.75%; As expected [US Market Close].

-(IR) Reportedly Iran is prepared to remove highly enriched uranium from its territories; May transfer highly enriched uranium to China - Al Arabiya [US Market Close].

-(IR) Iran President orders to restore internet in the country - press [US Market Close].

-(IR) US-Israeli strikes target Iran vessels in Strait of Hormuz [timing uncertain, single headline only] - Nour.

-(IR) Follow Up: US CENTCOM: US forces conducted self-defense strikes in Southern Iran on Monday [25th May, 2026].

-(IL) Israeli Military reportedly says sirens for hostile aircraft sounded in northern area of Sasa - press.

-(PK) China and Pakistan reach new "broad" consensus on deepening strategic partnership - Joint Statement.

-(PK) UN Sec Gen Guterres: Strongly condemn the explosion targeting a train in Pakistan.

Levels as of 01:20 ET

Nikkei 225 -0.1%; ASX 200 -0.4%; Hang Seng +0.2%; Shanghai Composite -0.7%; Kospi +2.7%;

Equity S&P500 Futures +0.6; Nasdaq100 +0.8%; DAX -0.3%; FTSE100 +0.2%.

EUR 1.1647-1.1628; JPY 159.01-158.85; AUD 0.7176-7157; NZD 0.5874-0.5847.

Gold -0.9% at $4,531/oz; BTC -0.8% at $76,911, Crude Oil -4.6% at $92.18/bbl; Copper -1.1% at $6.4003/lbs.