Similar to Q2, Kospi volatility continues to drive markets, while Iran is still uncertain

Asia market update: Similar to Q2, Kospi volatility continues to drive markets, while Iran is still uncertain; Meanwhile macro data has remained mixed; Nike continues to struggle in China; MSFT speculated to cut more jobs; Fed Chair Warsh to speak during the NY morning.

General trend and developments

- Overall Asian equities are again directionless ahead of the upcoming US-related events. Cautious start to the new quarter?
- Disappointing PMIs seen throughout Asia [including China, Indonesia, Japan, South Korea, Taiwan, Vietnam]. The Chinese data was hurt by new export orders.

- South Korea’s Jun chip exports accelerated further during the last few days of the month.

- The BOJ’s Q2 Tankan survey generally beat market ests, supported by large manufacturers. That being said, the BOJ suggested that the data could have been even stronger. This is the case because most firms replied before the US-Iran peace deal on June 15th. Ahead of the data, the markets were only pricing in a marginal chance of a BOJ rate hike in late Jul.

- The Yen remains at 40-year lows to begin the new quarter. Reticence, however, was seen among JP officials before the recent comments from Mimura. Can we interpret this silence as inaction or vigilance with regards to possible FX intervention, especially with the upcoming US jobs report [Thurs] and holiday [Friday]? US Jun ADP employment data is due on Wed.

- JGBs trade mixed. 10-year yields rise ahead of the bond auction results on Jul 2nd.

- An unnamed US official characterized the US/Iran talks as positive, as ships are transiting the Strait of Hormuz at ‘higher’ levels. According to Iran, dialogue with mediator Qatar on the implementation of the interim deal with the US, including the release of frozen assets, is likely to be on Wed [July 1st in Doha]. Trump is said to be okay with the talks going beyond the Aug 18th deadline (WSJ).

- Headlines related to the US/China tech war continue to appear. The Trump administration is said to be drafting a ban on imports of foreign energy inverters [the equipment that connects solar projects and batteries to the grid], according to a recent press report. Shares of Chinese co. Sungrow [300274.CN] have declined by >13%.

- Certain Chinese EV companies again report stronger sales in Jun m/m [Nio, XPENG]. Li Auto lags. BYD sales figures also in focus.

- Macau Jun Casino Revs miss ests.

- Mexico wants the USMCA to be extended for 16 years. July 1st is the deadline to renew the trade agreement.

- US equity FUTs -0.2% to -0.3% 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 8,779.

- (AU) Australia Jun Final PMI Manufacturing: 51.5 v 51.2 prelim (confirms 3rd month of expansion).

- (AU) Australia May Building Approvals M/M: -1.1% v 0.0%e.

- (NZ) RBNZ may focus on ‘risk management equation’ and raise rates, according to analyst [RBNZ to meet on Jul 8th (Wed)] – US financial press.

China/Hong Kong

-(CN) Shanghai Composite opens -0.1% at 4,090; (HK) Hang Seng closed for the 'Hong Kong Special Administrative Region Establishment Day'.

-(CN) China Jun RatingDog PMI Manufacturing: 51.7 v 52.0e (8th month of expansion).

-(CN) China's President Xi: We must clearly grasp China's national conditions and the themes of the times - comments at the Communist Party's 105th Anniversary Event.

-(CN) LI Reports Jun deliveries 30.9K v 33.4K m/m.

-(CN) World Bank reportedly proposes phasing out China lending by 2031; Proposal to be discussed during the week of July 20th - FT.

-(CN) China Communist Party Membership has reached 101M, +1% y/y – US financial press.

-(CN) China PBOC sets the yuan mid-point at 6.8067 v 6.8109 prior.

-(CN) China PBOC Open Market Operation (OMO): Sells CNY100B in 7-day Reverse Repos; Net drains CNY1.16T v drains CNY155B prior [the largest net liquidity drain since Oct 2025, the figure includes drainage from the PBOC's new overnight reverse repo tool; the large drain also follows month and quarter-end].

-(HK) Hong Kong and mainland China to begin data sharing in 2026 – SCMP.

-(HK) Macau Jun Casino Rev (MOP): 18.5B, -12.1% y/y.

Japan

- (JP) Nikkei 225 opens +1.0% at 70,774.

- (JP) Japan Q2 Tankan Large Manufacturing Index: 22 v 16e; Large Manufacturing Outlook: 17 v 13e (large manufacturing index improvement for 5 straight quarters, highest level since March, 2018).

- (JP) Japan top FX diplomat Mimura: US Official made supportive remarks about FX action; Haven't received any objection from US against Japan's intervention from late April; Japan-US currency coordination remains close.

- (JP) Japan Jun Final PMI Manufacturing: 54.8 v 54.9 prelim (confirms 5th month of expansion).

- (JP) Japan Jun Consumer Confidence: 33.8 v 34.1e.

- (JP) Japan oil refinery operating rate 81% in week to June 27th v 75.9% in early Apr.

- (JP) Japan Econ Min Kiuchi: Hope BOJ works closely with govt to durably achieve the target [**Note: comments follow recent press speculation that Japan govt apply pressure for BOJ slow its tightening pace] [EU market close].

Korea

- (KR) Kospi opens +1.4% at 8,592.

- (KR) South Korea Jun Trade Balance: $36.1B v $32.6Be (strongest level of monthly surplus on record, exports mark strongest y/y rise since October, 1978); Exports Y/Y: 70.9% v 60.9%e; Semiconductor Exports Y/Y: 199.5% ($44.8B).

- (KR) South Korea Jun PMI Manufacturing: 52.1 v 54.8 prior (7th month of expansion).

- (KR) Kospi remains volatile to start the new quarter, as Kospi falls -2.4% to 8,274.

Other Asia

- (ID) Indonesia May Trade Balance: -$1.61B v $1.1Be.

- (ID) Indonesia Jun PMI Manufacturing: 46.9 v 50.0 prior (1st month of contraction).

- (ID) Indonesia Jun CPI M/M: 0.4% v 0.3%e; Y/Y: 3.3% v 3.2%e.

- (IN) India Central Bank (RBI) Financial Stability Report for Jun: global financial stability risks remain elevated [EU market close].

- (IN) India Jun Final PMI Manufacturing: 54.2 v 54.5 prelim (confirm 60th month of expansion).

- (MY) Malaysia Economy Minister: Government readying AI governance bill to help regulate human-machine future - ANT International's Global Development Center opening.

- (SG) Singapore Central Bank (MAS) announces issuance of October policy statement to be released no later than Oct 14th, 2026.

- (SG) Singapore Q2 URA Overall Private Residential Property Prices Q/Q: 0.5% v 0.9% prior.

- (TW) Taiwan Jun PMI Manufacturing: 55.2 v 56.1 prior (7th month of expansion).

- (TH) Thailand Jun PMI Manufacturing: 53.6 v 52.6 prior (14th month of expansion).

- (MY) Malaysia Jun PMI Manufacturing: 50.7 v 49.9 prior (1st month of expansion).

- (PH) Philippines Jun PMI Manufacturing: 50.9 v 50.8 prior (2nd month of expansion).

- (VN) Vietnam Jun PMI Manufacturing: 51.8 v 52.8 prior (12th month of expansion).

North America

- (US) US Supreme Court rules against Trump's order to limit birthright citizenship; Vote was 6-3 [US market close].

- (US) Fed's Hammack (voter): Inflation is still too high, Fed may need to consider rate hikes to bring inflation to target; Seeing no tension in the dual mandate right now - CNBC interview [US market close].

- (US) Jun Consumer Confidence: 91.2 v 94.4e [US market close].

- (US) May JOLTS Job Openings: 7.594M v 7.300Me [US market close].

- (US) Trump administration said to be drafting a ban on imports of foreign energy inverters, the equipment that connects solar projects and batteries to the grid - press [US market close].

- (US) Pres. Trump: Disappointed in Supreme Court Birthright Citizenship ruling; Says can easily make it up in Congress through legislation, no Constitutional amendment is needed [US market close].

- (US) Apr S&P Cotality House Price Index (20-City) M/M: -0.04% v -0.10%e; Y/Y: 1.14% v 0.90%e [US market close].

- (US) Apr FHFA House Price Index M/M: -0.1% v 0.2%e [US market close].

- (US) Jun Chicago Purchase Managers Index (PMI): 56.7 v 55.1e [US market close].

- (CA) Canada Apr GDP M/M: 0.5% v 0.4%e; Y/Y: 1.1% v 0.9%e [US market close].

- (CL) Chile May Retail Sales Y/Y: 4.8% v 5.5%e [US market close].

- (CL) Chile May Unemployment Rate: 9.4% v 9.2%e [US market close].

- (CO) Colombia Central Bank raises Overnight Lending Rate by 75bps to 12%; more than the 50 bps expected; Inflation is on upward trend [EU market close].

- (US) Commerce Sec Lutnick: Approved Fable 5 to ensure alignment across the US government and strengthen America's leadership in AI - comments on X.

- (US) ANTHROPIC.IPO Follow up: US Commerce Department to lift export controls on Fable tonight - Politico [citing White House Official].

- (US) IEA forecasts US-based spending on power plants driven by coal and gas to hit $50B in 2026 - FT.

- (US) US reportedly hollows out the G20 agenda amid 'backdrop for Trump-Xi meeting' - SCMP.

- (US) US Senator Daines said US and China should de-escalate from ‘tit-for-tat’ actions – SCMP.

- (US) PFE Confirms receipt of a letter from a US House committee that is probing China drug trials - press.

- (US) VP Vance: Birthright citizenship ruling disappointing; 5-4 ruling suggest concept is hanging by a thread - Fox News Interview.

- (US) Pres. Trump: For the first time ever, the Republican Party will hold a MIDTERM CONVENTION, to be held in Dallas.

- (US) President Trump: Since September, my Council of Economic Advisers has been led by the very highly respected Professor Pierre Yared, of Columbia University, as he and his team of “Brainiacs” at the CEA have worked around the clock to Make America WEALTHY Again — with Great Success! Unfortunately, Pierre is returning to Columbia Graduate School where he is greatly respected by all.

- (MX) Mexico Economy Min Ebrard: We don't think the USMCA treaty will be scrapped; Deal could be extended to 2036 or 2042.

- (MX) Mexico May Public Balance (MXN): -418.7B v -220.8B prior.

- (VE) US General: US Military has deployed 900 personnel inside Venezuela for relief efforts, and another 800 in Caribbean hubs Puerto Rico, Curacao.

- (CO) Colombia's President De La Espriella taps Miguel Gómez Martínez as Finance Minister - comments on X.

- (DRC) Democratic Republic of Congo: Number of confirmed Ebola cases rises to 1,333 (prior 1,118), including 399 deaths.

Europe

- (DE) Germany Jun Preliminary CPI M/M: -0.3% v 0.0%e; Y/Y: 2.3% v 2.6%e [EU market close].

- (DE) Germany reportedly demanding €400B cut to EU Commission's proposed 2028-34 budget of €2.0T - press (20% reduction) [EU market close].

- (EU) Reportedly ECB's decision's on minimum reserve requirement is expected later this autumn - press [EU market close].

- (EU) ECB’s Dolenc (acting Slovenia member): If current oil prices hold, the ECB may be able to wait until Sept to decide if more policy steps are needed [EU market close].

- (EU) ECB's Rehn (Finland): Sees plenty of geopolitical uncertainty going forward; It's important not to commit to a predetermined rate path; Doesn't see major second-round effects materializing [EU market close].

- (UK) Bank of England (BOE) Gov Baily: Frustrated not back at inflation target and could still rise later this year - CNBC [EU market close].

- (UK) BOE considers implementing an AI "kill switch" to prevent trading bots from causing a potential financial meltdown, worries that new technologies could amplify volatility in stressed financial markets - Telegraph [EU market close].

- (PT) Portugal Jun Preliminary CPI M/M: 0.1% v 0.2% prior; Y/Y: 3.2% v 3.3% prior [EU market close].

- (EU) ECB's Demarco (Malta, dove): Should not rush into any further rate hike as not seeing 2nd round effects, undue wage pressures or any de-anchoring of inflationary expectations.

- (NL) Netherlands Q1 Final GDP Q/Q: 0.2% v 0.1% prelim; Y/Y: 1.4% v 1.2% prelim.

- (NL) Netherlands May Retail Sales Y/Y: 2.3% v 3.5% prior.

- (NL) Netherlands Jun Manufacturing PMI: 55.5 v 55.9 prior (13th month of expansion).

- (IE) Ireland Jun PMI Manufacturing: 54.9 v 55.9 prior (18th month of expansion).

- (IE) Ireland Jun Consumer Confidence: 62.2 v 59.4 prior.

- (TR) Turkey Central Bank (CBRT) has scrapped the additional Lira Required Reserve Ratios (RRR) for FX deposits; the reserve requirements according to new ratios will be maintained on Jul 17.

- (FR) France June new car registrations rose to 188,787 vehicles, +11.37% y/y; Tesla June new car registrations in France, +104.99% y/y.

- (RS) Serbia: US OFAC extends license for NIS refiner to July 31st.

Middle East

- (IR) President Trump to stick with diplomatic talks on Iran for now, told aides that he is 'okay' if talks go past the 18th August deadline - WSJ.

- (IR) Iran official: Serious challenges remain in US implementation of MOU; IAEA access to damaged nuclear sites remains blocked [EU market close].

- (IR) US Official: Ships are transiting the Strait of Hormuz at 'higher levels'; Witkoff, Kushner and regional leaders had 'positive' talks [related to Iran].

- (IL) Israel Fin Min said to call for a sharp Base rate cut at the upcoming BOI policy decision [EU market close].

Levels as of 01:20 ET

Nikkei 225 +0.8%; ASX 200 -0.6%; Hang Seng -0.6%; Shanghai Composite +0.9%; Kospi -1.5%.

Equity S&P500 Futures -0.2%; Nasdaq100 -0.3%; DAX -0.1%; FTSE100 -0.3%.

EUR 1.1427-1.1402; JPY 162.84-162.52; AUD 0.6921-0.6883; NZD 0.5687-0.5661.

Gold -0.9% at $3,974/oz; BTC -0.9% at $59,229; WTI Crude Oil +0.5% at $69.81/bbl; Copper -1.7% at $6.1395/lbs.