Markets whipsaw on US-Iran deal prospects – UK PM challenge expected

General trend and developments

-Markets opened for the week nervous with US equity FUTs -1% as on Saturday Iran’s military announced it will re-close the Strait of Hormuz, citing US failure to stop the fighting in Lebanon as required by the MOU. However, no timetable was given and the US military (and later Pres Trump) rejected Iran’s announcement, saying that “dozens” of commercial vessels are continuing to pass through the waterway. However, tracking data indeed indicated that shipping on Sunday slowed to around 5 ships compared to the dozens in the 24-36 hours previously.

-Then, just prior to the Monday open further concern as Iran Foreign Min Aragchi and Speaker Galibaf initially walked into the room where VP Vance and the US team were waiting in Switzerland, greeted the Pakistani mediators, then walked straight back out again without even recognizing the US side. Trump had earlier threatened to "take over" Iran if the Strait of Hormuz was not immediately re-opened by Iran.

-Markets then rebounded strongly as Qatar and Iran released statements that the teams ended up meeting separately with Pakistan and Qatar, laying groundwork to begin negotiations on the final agreement, with good progress being reported. In particular Iran Foreign Min Aragchi said that the blockade had been lifted.

-Overall, the US-Iran talks still very delicate with the Iranians citing ongoing conflict between Israel and Lebanon (Israel says it is responding to Hezbollah attacks), while Trump warned that Iran must immediately stop their proxies in Lebanon from causing trouble. “If they don’t, we’ll hit Iran very hard again, just like we did last week, only harder”.

-Nikkei outperformed Asia, +2% to touch another record high >73K. Kospi again volatile, at one point up >1% earlier, enough time to see SK Hynix briefly overtake Samsung to be Korea’s most valuable firm by market cap. Hang Seng underperformed -0.8%.

-USTR Greer to travel to India, taking up the baton from Trump and India PM Modi’s first meeting in over a year at the G7 last week, aiming to issue a joint statement on trade with India.

-UK Labour party sources over the weekend (later followed by a Truth Social post by Pres Trump) reported that PM Starmer may resign as early as Monday and set a timetable for “an orderly departure”. A move that would put Makerfield by-election winner Andy Burnham into pole position to take over, with former Health Secretary Wes Streeting, former Dep PM Angela Rayner and others such as Ed Miliband, Mahmood and Reeves may all see themselves in with a chance to become the next PM - in what would be the UK’s 6th Prime Minister in just 10 years.

-Japan BOJ chances of a rate hike by October up to 23.5% compared to 18.5% Thursday, while October now seen odds-on at 60%, up from 52.5% Thursday.

-US Fed Fund futures now imply 76% chance of Sept rate hike by the US Fed.

-China e-commerce and retail names down amid a US broker seeing weaker sales figures for 6.18 [CN annual shopping event] weighing on BABA, JD.COM, Meituan.

-Mixed performance for Chinese chip and AI-related names amid the delayed reaction to China’s plan to subsidize the consumption of AI products. [Will this be supportive to prices, as the supply of these products is expected to rise? In recent times, China has elected to pursue an anti-involution campaign for trade-focused industries [such as solar and EVs]. This strategy has sought to limit market price declines].

-Traders are currently preparing for quarter-end [early next week on Tues (Jun 30th)]. China’s PBOC is being ‘stingy’ going into month/quarter-end with net OMO liquidity drains, thus far. Recall, the central bank had disclosed its new liquidity management tactic back in late May. This system relies more on the underlying demand for liquidity among financial institutions.

-H5 bird flu strain detected in Australia for the first time, meaning the highly contagious variant has now spread to every continent.

-US and China continue to trade counter-punches in high tech restrictions as China added US rare earths and further defense firms to its export control list.

-Pres Trump indicated in an interview over the weekend a potential closing of the gap between the US govt and Anthropic’s forced withdrawal of Fable 5 / Mythos AI from usage over a week ago. Trump said that while Anthropic was seen as a national security threat last week, relations have since improved.

-Right-wing Colombia Presidential outsider candidate Abelardo de la Espriella appears to have confirmed his narrow lead in the first run-off election at end-May by narrowly beating leftist candidate Senator Iván Cepeda in the final run-off for the Colombia Presidential Election. The razor thin win by 49.7% to 48.7% needs to be confirmed by the judiciary as Cepeda has not yet conceded. [A win confirmed for de la Espriella would be the latest in a wave of wins for right-wing Presidents and parties throughout Central and South America over the past couple of years].

-US equity FUTs -0.2% to flat during Asia trading.

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

-Tue Jun 23rd: KR Jun Consumer Confidence, AU & JP Jun Prelim S&P PMIs, (Tue night, European and US Jun Preliminary S&P PMIs).

-Wed Jun 24th: AU May CPI, JP BoJ Summary of Opinions, TH Rate Decision, (Wed night, US May Final New Home Sales).

-Thu Jun 25th: AU May Jobs, US Fed Bank Stress Test Results, US May Core PCE.

-Fri Jun 26th: JP Jun Tokyo CPI.

Holidays in Asia this week

-Fri Jun 26th: India.

Headlines/economic data

Australia/New Zealand

-(AU) ASX 200 opens -0.4% at 8,793.

-(AU) Follow up: Australia Agriculture Minister: Testing has confirmed H5 bird flu detected in second bird found in Western Australia.

-(AU) Scientists have detected the H5 bird flu strain in Australia for the first time, meaning the highly contagious variant has now spread to every continent - press [weekend update].

-(NZ) RBNZ: New Zealand May Credit Card Spending M/M: 1.8%; Y/Y: 5.1%.

China/Hong Kong

-(CN) Shanghai Composite opens +0.1% at 4,093; (HK) Hang Seng opens -0.5% at 23,812.

-(CN) China MOFCOM: adds US firms to its export control list in a trade countermove; the list includes US firms that are dependent on rare earths, such as defense cos.

-(CN) China PBOC Monthly Loan Prime Rate (LPR) Setting: Leaves both leave 1-year and 5-year rate unchanged; As expected.

-(CN) China Vice Premier Ding Xuexiang: Risk of fragmented supply chains is growing - comments at the China International Supply Chain Expo [CISCE].

-(CN) According to an Australian brokerage firm the PBOC to maintain managed path for the Yuan - US financial press.

-(CN) China May Youth Jobless Rate: 15.6% v 16.3% prior.

-(CN) China Transport Ministry: Domestic travel remained flat during recent weekend holiday - China press.

-(CN) US broker said to see weaker sales figures for 6.18 [shopping event] thus weighing on China e-commerce companies – US financial press.

-(HK) Hong Kong's Finance Chief: Hong Kong to roll out measures boosting offshore yuan trading in July, 2026 - [update].

-(HK) Follow up: Hong Kong Financial Chief Chan: Hong Kong to ease investment rules and IPO access for China - China press.

-(CN) China PBOC sets the yuan mid-point at 6.8150 v 6.8130 prior.

-(CN) China PBOC Open Market Operation (OMO): Sells CNY477B in 7-day Reverse Repos; Net drains CNY342B v injects CNY60B prior.

Japan

-(JP) Nikkei 225 opens -0.3% at 71,067.

-(JP) Japan govt targets public and private sector investments of ¥10.5T ($65B) in physical AI by fiscal 2040 - Nikkei [weekend update].

-(JP) Japan Fin Min Katayama: Cutting food tax to 1% would save ¥36,000/person; Consumption tax will return after it's 2-year cut period.

-(JP) Japan Fin Min Katayama: Won't comment on specific FX levels; Ready to respond appropriately to currency moves at any time as needed; Will take action on FX as needed at any time.

-(JP) Japan to hike visa fees for foreigners 5x from July, 2026 - US financial press.

-(JP) Japan PM Takaichi: Expects BOJ to closely coordinate with govt; Conduct monetary policy appropriately to achieve 2% inflation target.

-(JP) BOJ Dep Gov Himino: Takes some time for policy to have impact on economy - Lower House budget committee testimony.

-(JP) Japan Trade Min Akazawa: Hopes free transit through Hormuz swiftly resumes.

-(JP) According to the JSDA, trust banks purchased a net of ¥2.13T of JGBs in May [the highest amount since Jun 2024] – US financial press.

-(JP) Nikkei discusses growing views that the 10-year JGB yield will hit 3% by year-end; some are focusing on Japan’s economic blueprint which is due in Jul - Nikkei.

-(JP) META Japan said to consider implementing mandatory age verification for use of social media - Nikkei [weekend update].

Korea

-(KR) Kospi opens -1.1% at 8,954-(KR) South Korea's Property Chief Kim Yong-beom: Flags property risks from suggested chip windfall tax - Facebook post (update)

-(KR) South Korea to extend FX stability levy exemption for further 3 months - Korea press.

-(KR) Two South Korean vessels said to have passed through the Strait of Hormuz after US, Iran signed ceasefire MOU [timeframe uncertain] - press.

-(KR) South Korea Jun Exports 1-20 Days Y/Y: 60.4% v 64.8% prior; Imports Y/Y: 23.2% v 29.3% prior.

Other Asia

-(MY) Malaysia Econ Min Akmal: Prioritizing projects under 13th plan to support economic recovery if gulf crisis stretches.

-(PH) Philippines Economic Planning Chief Balisacan: Economy seen improving in H2; Philippines aims for 3.5%-4.5% GDP growth for 2026 - interview on One News TV.

-(TH) Thailand Fin Min Ekniti: Will lift economic growth potential from 2.7% to 3% by 2030.

North America

-(US) Trump says Anthropic was seen as a national security threat last week, but relations have improved since with the AI giant - Axios [weekend update].

-(US) USTR: Jamieson Greer to travel to India & Uzbekistan.

-(CO) Colombia elects De La Espriella in Colombia Presidential Election Run-off, in preliminary count.

-(US) President Trump to sign executive orders at 3:30pm ET, Monday 22nd June, 2026.

-(US) US Department of Agriculture: Three new cases of screwworm, taking total number of domestic detections to 15 cases; Will start sterile fly dispersal over Crockett, Texas.

-(US) WTI Crude FUTs erases gains from today's openings; US/Iran talks in Switzerland are among the focal points; Iran's Foreign Ministry has been generally 'upbeat'.

-(US) US Fed Fund futures now imply 76% chance of Sept rate hike.

-(US) Bain Capital CLO tranche defaults in post GFC first; the article refers to a European CLO – financial press [update from Jun 19th].

-(CO) Colombia President Petro: Too early to know Colombia election winner - post on X.

-(CO) De La Espriella: US President Donald Trump has congratulated me on election victory - post on X.

Europe

-(UK) Reportedly UK PM Starmer will resign on Monday and set a timetable for an orderly departure, following challenger Andy Burnham's win in Makerfield byelection - The Observer [weekend update].

-(UK) Transportation Sec Heidi Alexander has called on PM Keir Starmer to set a timetable for his departure - FT [weekend update].

-(UK) META UK’s govt planning to compel Meta and YouTube to push local news content - FT [weekend update].

-(UK) Follow Up: Burnham to seek coronation to become PM by Sept – London Times.

-(UK) Markets are expected to be concerned if Milband becomes Chancellor – London Times [update].

-(UK) US President Trump: Kier Starmer will resign as Prime Minister of The United Kingdom. He failed badly on two very important subjects- IMMIGRATION AND ENERGY (OPEN NORTH SEA OIL!). I wish him well [in line with prior speculation] - Truth Social [update].

-(IT) Trump: Italy PM Meloni "wants to be friends again in order to get her 'numbers up.' No thanks!!!" - Truth Social [weekend update].

-(IT) US Pres.Trump: After spending Trillions of Dollars on NATO, Italy, and its Prime Minister, wouldn’t even think of becoming involved with the Islamic Republic of Iran and their very serious Nuclear Threat. For decades, we defend them but, when tested, they are not there to defend us, and the rest of the World. - post on Truth Social (update).

-(IT) Italy reportedly open to Germany joining fighter jet project - FT.

-(NL) Netherlands Jun Consumer Confidence: -39 v -46 prior.

-(NL) Netherlands May House Price Index M/M: 0.6% v 0.0% prior; Y/Y: 4.4% v 4.3% prior.

-(IE) Ireland reportedly says capital market deal possible by year-end - FT.

Middle East

-(IR) Iranian Foreign Minister: Oil and petrochemical exports are waived, blockade lifted, some frozen assets released, and major reconstruction & development plan launched for Iran - post on X.

-(IR) Shipping said to have slowed in Strait of Hormuz on Sunday following Iran's Saturday announcement that the Strait is closed once again - US financial press.

-(IR) Follow up: Qatar: First session of US-Iran high level talks has concluded - Statement.

-(IR) US President Trump: Iran must immediately stop their highly paid PROXIES in Lebanon from causing trouble. If they don’t, we’ll hit Iran very hard again, just like we did last week, only harder – Truth Social [update from Sun morning].

-(IL) Army Radio: Fighting in Lebanon on hold over past 48 hours.

-(IR) US and Qatar are reportedly working on plan to give Iran access to billions of dollars in cash frozen in Qatar, allowing it to be used for humanitarian purposes - WSJ [weekend update].

-(IR) Trump: There will be no tolls in the Strait of Hormuz, unless they are imposed for the US - Truth Social [weekend update].

-(IR) US VP Vance and Iranian officials as of Sunday have officially landed in Switzerland to kick off the 60 days of talks outlined by the MOU (update) [weekend update].

-(IR) US VP Vance: Confident that Israel and Hezbollah can maintain the ceasefire; We will give this negotiation with Iran a chance [weekend update].

-(IR) US VP Vance and Iranian officials as of Sunday have officially landed in Switzerland to kick off the 60 days of talks outlined by the MOU (update) [weekend update].

-(IR) On Saturday, Iran military announces it will re-close the Strait of Hormuz, citing US failure to stop the fighting in Lebanon as required by the MOU - press [weekend update].

-(IR) Follow up: Iran negotiating team said to reiterate the Strait of Hormuz will not reopen as long as ceasefire in Lebanon is not respected and waivers for sale of Iranian oil are not issued - Iran press, citing sources close to negotiating team in Switzerland [weekend update].

-(IR) Follow up: US Official: US-Iran talks [are] still ongoing - pool report.

-(IR) US VP Vance: Trump empowered us to find a diplomatic solution to a host of issues.

-(IR) US Diplomat: Talks included robust discussions on nuclear deal - comments on the talks in Switzerland between the US and Iran.

-(IR) Follow up: Iran Foreign Ministry: Technical team to continue work but negotiating delegation work has concluded - Iran press.

-(QA) Follow up: Qatar Interior Ministry: QatarEnergy had at least 54 people injured and 18 missing after explosion at factory in Ras Laffan.

Levels as of 01:20 ET

Nikkei 225 +2.0%; ASX 200 -0.1%; Hang Seng -0.6%; Shanghai Composite +0.8%; Kospi +0.6%.

Equity S&P500 Futures -0.2%; Nasdaq100 flat; DAX -0.1%; FTSE100 flat.

EUR 1.1474-1.1452; JPY 161.69-161.24; AUD 0.7019-0.7000; NZD 0.5741-0.5723.

Gold +0.7% at $4,187/oz; BTC flat at $64,209; Crude Oil -0.8% at $75.25/bbl; Copper -0.3% at $6.3203/lbs.