Oil, Gold fail to kick on as Israel-Iran conflict enters 4th day

Asia market update: Oil, Gold fail to kick on as Israel-Iran conflict enters 4th day; China May 'data dump' mixed; JP BOJ Rate Decision tomorrow.

General trend

- Investors entered the week with trepidation after Friday’s fireworks in the markets following Israel’s extensive attacks against Iran’s nuclear and military infrastructure, followed by Iran’s missile counterattacks into Israel. Reports are sketchy, but reports indicate around 14 Israeli's and more than 100 Iranians have been killed thus far.

- WTI oil opened up ~4% higher than Friday’s close, though below Fri peak levels, but lost ground steadily throughout the session to be down not far above the Friday close. Gold also failed to push any higher, while US equity FUTs clawed back some of their Friday losses.

- Nikkei and Kospi outperformed Asia, +1.3%, while HK/CN/AU lagged at flat.

- Ahead of the BOJ rate decision tomorrow, Japan's entire yield curve today gained back some of the reduced yields due to Friday’s outbreak of hostilities between Israel and Iran.

- CFTC Japanese Yen net long positions continue to pull back from their record ~179K contacts as at Apr 29th, now down to ~144.6K contracts Net long as at Jun 3rd.

- China Retail Sales at over 6% for May saw its fastest rise since Dec 2003, but overall the May ‘data dump’ was mixed, still failing to show any meaningful economic pick-up, including home prices which show no signs of stopping their precipitous drop since 2022.

- Prior to this, China’s aggregate financing and New Yuan loans showed no uptick so desperately wanted by the China govt; After the May data dump China's NBS official said May Retail Sales was boosted by holidays and special consumer programs (e.g "618" day) but overall the domestic economy still faces 'many' unstable and uncertain factors.

- Taiwan added China's Huawei and chip giant SMIC to its export control list – a move certain to inflame China tensions.

- The strength of New Zealand’s nascent economic recovery since last August thrown into doubt by both Manufacturing PMI last week and now May Services Performance of Services also plunging to 44.0 [lowest since Jun 2024].

- Key Aussie energy player Santos +15% as it agrees to a buyout worth $30B by Saudi energy giant Aramco in a consortium with Carlyle Group. Transaction subject to govt approvals.

- Shares of Nippon Steel popped +5% at Monday’s open on Pres Trump’s Exec Order late Friday approving its takeover of US Steel. However, details around control of US Steel still not clear. Later pared gains to +2%.

- US equity FUTs +0.2% during Asian trading.

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

- Tue Jun 17th JP BOJ Rate Decision, DE Jun ZEW Sentiment, (Tue night US May Retail Sales).

- Wed Jun 18th NZ Q1 Current Account, JP May Trade Balance (Wed eve UK May CPI, Wed night US May Housing starts, FOMC Projections, Rate Decision + Presser).

- Thu Jun 19th NZ Q1 GDP, AU May Jobs, (Thu eve BOE Rate Decision).

- Fri Jun 20th JP May CPI, CN Jun LPR.

Holidays in Asia this week

- Thu Jun 19th (USA Juneteenth).

- Fri Jun 20th New Zealand.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.1% at 8,540.

- Australia PM Albanese meets with Canada PM Carney pre-G7 Summit in Canada; Reaffirm commitment in trade, rare earths and Five Eyes partners.

- New Zealand May Performance of Services Index: 44.0 v 48.1 prior [lowest since Jun 2024].

- Santos (STO.AU) Follow up: Reportedly Adnoc to be ready to announce takeover of Co for $30B; announcement expected Monday morning local time - financial press.

China/Hong Kong

- Hang Seng opens -0.4% at 23,791; Shanghai Composite opens -0.2% at 3,369.

- China NBS official: Reiterates domestic economy still faces 'many' unstable and uncertain factors - comments on Jun data.

- CHINA MAY INDUSTRIAL PRODUCTION Y/Y: 5.8% V 6.0%E; YTD Y/Y: 6.3% V 6.4%E.

- CHINA MAY RETAIL SALES Y/Y: 6.4% V 4.9%E [fastest rise since Dec 2023]; YTD Y/Y: 5.0% V 4.8%E.

- CHINA MAY YTD FIXED URBAN ASSETS Y/Y: 3.7% V 4.0%E.

- China May Property Investment YTD Y/Y: -10.7% v -10.5%e.

- China May Surveyed Jobless Rate: 5.0% v 5.1%e.

- China May New Home Prices M/M: -0.2% v -0.1% prior; Used Home Prices M/M: -0.5% v -0.4% prior.

- China reportedly to review impact of US data curbs from the Pres Trump budget cuts - financial press.

- China NPC Standing Committee to hold meeting Jun 24-17- Xinhua.

- China Cabinet Meeting: To set up a new model for property development and vows more efforts to stabilize market - state TV [weekend update].

- China PBOC said to likely keep liquidity reasonably ample – press [weekend update].

- China May YTD aggregate financing (CNY): 18.6T V 18.7TE [weekend update].

- China May YTD new Yuan loans (CNY): 10.680T V 10.960TE [weekend update].

- China May M2 money supply Y/Y: 7.9% V 8.1%E [weekend update].

- China plans to regulate overseas transmission of auto data – press [weekend update].

- China PBOC sets Yuan reference rate: 7.1789 v 7.1772 prior.

- China PBOC Open Market Operation (OMO): Injects CNY242B in 7-day reverse repos; Net injects CNY68B v injects CN68B prior.

Japan

- Nikkei 225 opens +0.7% at 38,072.

- Japan 2,5,10,20,30,40 year JGB yield curve rises 2-4bps. following 4-6bps fall on Friday during Israeli attacks on Iran.

- Follow up: Japan BOJ to consider reducing JBG purchases by ¥200B per quarter from the Spring of 2026 (largely inline) – Nikkei.

- Japan PM Ishiba: No change in stance of seeking removal all US tariffs - comments after phone call with US Pres Trump; Agreed to meet with Trump at G7 in Canada [June 15-17th in Kananaskis, Alberta]; Agreed to accelerate talks for mutually beneficial agreement.

- Follow Up: Japan PM Ishiba: Want to distribute ¥20K per adult and ¥40K per child in cash handout scheme for low-earners; Expects handouts to require ~¥3.5T of funding.

- Japan Trade Negotiator Akazawa: US-Japan trade talks reaching an important stage; Future schedule of talks not yet set - comments to media [weekend update].

- US Steel (X): US Pres Trump approves merger with Nippon Steel [weekend update].

Korea

- Kospi opens +0.3% at 2,903.

- South Korea Apr M2 Money Supply M/M: +0.2% v -0.1% prior.

- South Korea said to be unveiling extra budget of 'at least' KRW20T - Korean press.

- North Korean troop casualties in Ukraine now said to be >6,000 - UK Defense Intelligence.

Other Asia

- (IN) Reportedly India govt asks state mining co. IREL to cease exports of rare-earth materials to Japan after China's restrictions to Japan - press.

- Thailand Commerce and Fin Min Pichai: Exports in May still "good"; We believe Thailand will have low US tariffs, possibly 10% - financial press.

North America

- (US) Pres Trump expects trade deals to be made in G-7 in Canada (Jun 15-17) - financial press.

- (US) Pres. Trump: It is time for a deal, we will see what happens; Hopes deal between Iran and Israel, but sometimes you have to 'fight it out' - financial press.

- (US) Pres. Trump: Iran and Israel should make a deal, and will make a deal, just like I got India and Pakistan to make, in that case by using TRADE with the United States to bring reason, cohesion, and sanity into the talks with two excellent leaders who were able to quickly make a decision and STOP!

- (US) Pres Trump: US involvement in Iran-Israelran-israel conflict is possible; not currently involved - ABC news.

- (US) Trump received call from Putin on birthday, talk about Israel, Iran and Ukraine.

- (US) Pres Trump said to plan to focus on AI, trade, minerals and energy at G7 summit in Canada - press cites US official [Late Fri update].

- Boeing: Delivers first aircraft to China in tariff war respite; 787 departed Paine Field (Seattle area) for Shanghai on Fri morning [Late Fri update].

Europe

- (IR) Iran Pres Pezeshkian: Iran is Not seeking to develop Nuclear weapons - financial press.

- (IL) Israel National Security Advisor Hanegbi: Iran has thousands of missiles left - US Army Radio.

- (IL) Israel reports 4 killed in overnight Iran missile attacks on Tel Aviv - financial press.

- (RU) European Commission Pres Von der Leyen: Sanctions are critical for pressuring Russia; Spoke with Israel PM Netanyahu today - financial press

- (IL) Israel IDF: Identifies Iranian missiles launched towards Israel - financial press.

- (IL) Israeli Military: Air Force is currently attacking surface-to-surface missile sites in central Iran in 3rd day of aerial bombardment; Hits two natural gas processing facilities and one oil depot - financial press.

- (UK) Jun Rightmove House Prices M/M: -0.3% v 0.6% prior [first m/m decline since Dec 2024]: Y/Y: 0.8% v 1.2%.

- TankerTrackers Research: Analysis of today's satellite imagery over Tehran shows that multiple storage tanks housing petroleum products such as gasoline and diesel in Shahran (northern part of Tehran) have been destroyed last night. The aim of this was to cause fuel shortages and power outages.

- (IR) Iran Foreign Minister Araghchi: Received messages from US denying role in Israel attacks; We do not accept US claims, informal messages not enough.

Levels as of 01:20 ET

- Nikkei 225 +1.2%, ASX 200 flat, Hang Seng +0.1%; Shanghai Composite +0.1%; Kospi +1.2%.

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

- EUR 1.1524-1.1531; JPY 143.94-144.75; AUD 0.6466-0.6497; NZD 0.6004.6026.

- Gold -0.2% at $3,444/oz; Crude Oil +0.9% at $71.94/bbl; Copper -0.1% at $4.8090/lb.