Tech selloff intensifies as KOSPI experienced second-worst session since 2008

EU mid-market update: Tech selloff intensifies as KOSPI experienced second-worst session since 2008; Iran pushes back on Vance's optimism on nuclear issue.

Notes/observations

- Tech selloff dominating risk sentiment: US tech weakness from Monday has rolled through into Asia/Europe and is setting a negative tone again for US open. The Nasdaq closed down 1.3%, led by SpaceX (on its bond issuance) and Google (reports of top AI talent departures), with the Asia tech index falling a further 1.3%. SpaceX dropped another 16% to close at $155, now below its lowest IPO-day price in pre - notable given the large allocations South Korean and Japanese investors took in the private placement, and SPCX is extending losses in premarket below $150. Risk-off move was broad: gold, silver, bitcoin and US equity futures unwound all of Monday's US-Iran relief rally, while WTI held its lows around $73/bbl. The lack of clear Fed guidance from the recent FOMC is amplifying the volatility.

- TTN thinks current tech selloff isn't driven by one single event but by the accumulation of quite many small yet highly sensitive cracks - each one quietly undermining the clean narrative that more AI compute automatically equals durable economic value. Intelligence is shifting from scarcity to spoilage: models keep getting better and more widely used, yet the equity attached to them weakens as the scarce asset moves from raw capability to the controlled conversion of intelligence into clean, net-positive work. Full data centers, not empty ones, are becoming the bear case - they generate massive activity (tokens, agent loops, reviews, reversals) while enterprises pay for fewer unresolved decisions, creating hidden cleanup debt and friction that the P&L eventually feels. Google’s talent losses, Meta’s apparent caution on new equity issuance to fund AI Capex, Oracle’s balance-sheet pressures, and xAI openly selling Colossus capacity to Anthropic, Google, and others all signal the same maturing reality: frontier compute now carries real opportunity cost and is increasingly treated as rentable inventory rather than a proprietary moat. At the same time, Chinese models like GLM, Qwen, DeepSeek and others flood the usable middle market with cheap, good-enough intelligence, accelerating commoditization at the routing and validation layers. The market could be beginning to price the unbundling: winners will be those who turn abundant intelligence into fewer expensive human decisions, not those with the biggest clusters or prettiest benchmarks.

- Iran pushes back on Vance's narrative: Iran's Foreign Ministry spokesman Baghaei directly contradicted VP Vance's claim that inspectors were being allowed in, stating Iran has no plan to let IAEA inspectors visit the nuclear sites targeted in the conflict. Aligns with the IAEA's own position that it has been unable to inspect affected facilities (only Bushehr visited recently). Baghaei added that five parts of the MOU must be fully implemented before any negotiations on the nuclear dossier or IAEA role begin, warned Iran would respond to any Israeli MOU violation (including attacks on Hezbollah in Lebanon), and said the Strait of Hormuz remains open for now but post-60-day arrangements depend on negotiations. He could not confirm the US claim that unfrozen Iranian funds would be spent on American corn, soy and wheat. The market has shown limited reaction to reported progress in the Switzerland talks.

- EU PMIs disappoint, services the weak spot: The flash June composites came in soft across the board, with services dragging. Eurozone Composite was 49.5 (vs 49.2e) but services stayed contractionary at 48.9 for a third month, while manufacturing held up at 51.3. Germany was the standout weakness: Composite 48.0 (vs 49.7e), manufacturing slipping to exactly 50.0 (lowest since Jan 2026, avoiding a fifth expansion month) and services collapsing to 46.8 - the lowest since Nov 2022. The UK was similarly mixed, with manufacturing resilient at 53.1 (8th month of expansion) but services dropping into contraction at 48.7 and the composite at 49.4. ECB commentary leaned cautious on inflation: Lane sees energy prices keeping inflation well above target into H1 2027 and flagged second-round effects, echoed by Escriva and Kazimir on services-price persistence - though the broader market read is that ECB hike expectations are cooling with Lagarde downplaying second-round risks. The BoE is expected to hold a wait-and-see stance through the summer.

- President Trump signed an executive order updating the National Quantum Initiative, directing the US to deliver a scientifically useful quantum computer by 2028 and mandating post-quantum cryptography migration for high-value federal systems by 2031. This echoes IBM’s detailed public roadmap: it targets first examples of quantum advantage by the end of 2026 using its Nighthawk processor (starting at 120 qubits, scaling to multi-module systems with up to 1,080 qubits and 15,000 gates by 2028). In 2028–2029, IBM plans Starling, its first large-scale fault-tolerant quantum computer with ~200 logical qubits capable of running 100 million gates.

-Asia closed lower with KOSPI underperforming -10.0%. EU indices -0.5% to -1.6%. US futures -2.6% to -0.7%. Gold -2.0%, DXY +0.2%; Commodity: Brent -0.6%, WTI -0.6%; Crypto: BTC -2.7%, ETH -5.5%.

Asia

- Japan Jun Preliminary PMI Manufacturing: 54.9 v 54.5 prior (6th month of expansion).

- Australia Jun Preliminary PMI Manufacturing: 51.2 v 50.7 prior (3rd month of expansion).

- Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 72.9 v 70.7 prior.

- South Korea Jun Consumer Confidence: 106.6 v 106.1 prior.

- Japan Fin Min Katayama confirmed held online talks with US Tsy Sec Bessent on Monday; remain aligned on the possibility of currency intervention if needed.

Global conflict/tensions

- Iran press noted technical talks on implementing MOU concluded; groups would be formed on sanctions and nuclear issue.

Europe

- UK Labor MP Burnham to use a speech next week to pledge to grow the economy and commit to Labour’s fiscal rules.

Americas

- Fed's Goolsbee (non-voter) noted inflation was well above target and 'going the wrong way'.

- Fed Chair Warsh to testify before Financial Services Committee on July 14th.

- Apollo Debt Solutions [flagship retail credit fund] said to receive 17% redemption requests; capped investor redemptions and 5%.

Energy

- US temporarily lifted sanctions on Iranian oil exports for two months.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -1.06% at 632.50, FTSE -0.52% at 10,383.21, DAX -1.53% at 24,765.68, CAC-40 -0.88% at 8,325.78, IBEX-35 -0.77% at 19,425.53, FTSE MIB -1.33% at 52,093.50, SMI -0.03% at 13,843.70, S&P 500 Futures -1.49%].

Market focal points/key themes: European indices open lower across the board and remained under pressure through the early part of the session; risk appetite hurt after large decline in tech stocks in US/Asia; decline attributed to profit taking; among few sectors managing gains are health care and consumer discretionary; sectors leading the way lower include materials and technology; decline in SpaceX and Alphabet seen weighing on tech sentiment; Ramsdens to be acquired by FirstCash; reportedly EasyJet waiting for increased bid from Castlelake; earnings expected in the upcoming US session include FedEx and Carnival.

Equities

- Consumer discretionary: Heineken [HEIA.NL] +3.0% (new CEO).

- Industrials: Signify [LIGHT.NL] -15.5% (CMD targets).

- Technology: ASML [ASML.NL] -5.5% (broad tech stocks weakness).

- Telecom: Prysmian [PRY.IT] -5.0% (contract award), Telecom Plus [TEP.UK] -27.5% (earnings; strategy update).

- Utilities: RWE [RWE.DE] -1.0% (offering to increase stake in Amprion), Prysmian [PRY.IT] -5.0% (contract award).

Speakers

- ECB’s Lane (Ireland, chief economist): Inflation risks being above 2% for quite some time; Remained attentive to risks on both sides of outlook.

- ECB's Escriva (Spain): Oil prices are starting to ripple through other sectors; Services is having a very big inflation persistence.

- ECB's Kazimir (acting Slovakia member): Iran talks are good but energy repairs will take time; Next steps will depend on data but direction is clear.

- German Chancellor Merz stated that would push forward all pension proposals.

- Iran Foreign Ministry spokesman Baghaei: Iran had no plan to let IAEA inspectors visit nuclear sites targeted in conflict [**Note: pushes back against the JD Vance comments made yesterday].

- Iran UN Ambassador Bahreini stated that continued to discuss in very good talks yesterday at technical level. Two working groups will be established within the coming days to discuss the removal of sanctions against Iran, and issues related to Iranian nuclear activities. 5 parts of MOU needs to be fully implemented before negotiations on nuclear dossier and IAEA role.

Currencies/fixed income

- USD kept a steady tone as a risk-off sentiment reeled global markets.

- EUR/USD tested a 3-month low just holding above the 1.14 level as various EU PMI readings disappointed.

- GBP/USD at 1.3230 as politics remained on the front burner. Focus on the apparent succession of Andy Burnham to fill the vacant seat of prime minister. Markets to see how his policies and cabinet will flesh out.

- USD/JPY at 161.35. Pair moved off its Asian session highs as dealers took note of fresh Japanese warnings on the FX intervention front.

- 10-year German Bund yield last at 2.93%, France 10-year Oat at 3.69% and 10-year Gilt yield at 4.79% 10-year Treasury yield: 4.48%; 10-year JGB: 2.65%.

Economic data

- (EU) EU27 May New Car Registrations: 3.2% v 5.1% prior.

- (FR) France Jun Business Confidence: 94 v 95e; Manufacturing Confidence: 100 v 102e.

- (MY) Malaysia mid-Jun Foreign Reserves: $130.5B v $130.6B prior.

- (ZA) South Africa Apr Leading Indicator: 118.9 v 121.1prior.

- (FR) France May Retail Sales Y/Y: % v 0.3% prior.

- (FR) France Jun Preliminary PMI Manufacturing: 50.7 v 50.1e (moved back into expansion); PMI Services: 47.4# v 46.0e.

- (DE) Germany Jun Preliminary PMI Manufacturing: 50.0 v 50.2e (avoids a 5th month of expansion); PMI Services: 46.8 v 49.0e.

- (EU) Euro Zone Jun Preliminary PMI Manufacturing: 51.3 v 51.5e (5th month of expansion); PMI Services: 48.9 v 49.3e.

- (ES) Spain Apr Trade Balance: -€5.2B v -€4.4B prior.

- (ZA) South Africa Q2 BER Consumer Confidence: -19 v -7 prior.

- (TW) Taiwan May Export Orders Y/Y: 47.2% v 50.0%e.

- (TW) Taiwan May Unemployment Rate: 3.3% v 3.3%e.

- (UK) Jun Preliminary PMI Manufacturing: 53.1 v 53.5e (8th month of expansion); PMI Services: 48,7 v 50.1e.

- (HK) Hong Kong May CPI Composite Y/Y: 2.0% v 1.9%e.

- (IS) Iceland May Wage Index M/M: -0.3% v +1.5% prior; Y/Y: 5.9% v 6.4% prior.

Fixed income issuance

- (NL) Netherlands Debt Agency (DSTA) sold €1.98B vs. €1.5-2.0B indicated range in 3.5% Jun 2056 DSL Bonds; Avg Yield: 3.520% v % prior.

- (SE) Sweden sold SEK7.5B vs. SEK7.5B indicated in 9-month Bills; Avg Yield: 2.000% v 2.050% prior; Bid-to-cover: 2.65x v 4.12x prior.

Looking ahead

- (EU) ECB’s Vujcic (Croatia).

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (DE) Germany to sell €5.0B in 2.50% Jun 2028 Schatz.

- 05:15 (CH) Switzerland to sell 3-month Bills.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 05:30 (ZA) South Africa to sell combined ZAR2.55B in 2033, 2039 and 2042 bonds.

- 05:40 (UK) BOE allotment in 6-month GBP-enhanced liquidity repo operation (ILTR).

- 06:00 UK) Jun CBI Trends Total Orders: -33e v -41 prior; Selling Prices: 35e v 38 prior.

- 07:00 (BR) Brazil Central Bank (BCB) Jun Minutes.

- 07:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 08:00 (PL) Poland May M3 Money Supply M/M: 1.0%e v 1.0% prior; Y/Y: 11.4%e v 11.3% prior.

- 08:00 (MX) Mexico Apr Economic Activity Index (Monthly GDP) M/M: 0.8%e v 0.4% prior; Y/Y: 1.8%e v 1.4% prior.

- 08:00 (MX) Mexico Apr Retail Sales M/M: 0.1%e v 0.1% prior; Y/Y: 3,6%e v 2.9% prior.

- 08:00 (HU) Hungary Central Bank (MNB) Interest Rate Decision: Expected to cut Base Rate by 25bps to 6.00%.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:15 (US) ADP Preliminary Employment Change for 4-weeks ending Jun 6th: No est v +25.5K prior.

- 08:30 (US) Jun Philadelphia Fed Non-Manufacturing Activity: No est v -23.6 prior.

- 08:55 (US) Weekly Redbook LFL Sales data.

- 09:00 (CA) Bank of Canada (BOC) Gov Macklem.

- 09:00 (HU) Hungary Central Bank (MNB) post rate decision statement.

- 09:15 (NL) ECB’s Elderson (Netherlands).

- 09:45 (US) Jun Preliminary S&P PMI Manufacturing: 54.5e v 55.1 prior; PMI Services: 51.0e v 50.7 prior; PMI Composite: 52.1e v 51.5 prior.

- 09:55 (UK) BOE’s Taylor.

- 10:00 (US) Jun Richmond Fed Manufacturing Index: 8e v 13 prior.

- 11:30 (US) Treasury to sell 6-Week Bills.

- 13:00 (US) Treasury to sell 2-Year Notes.

- 13:30 (UK) BOE’s Dhingra.

- 15:00 (AR) Argentina Q1 GDP Q/Q: 0.4%e v 0.6% prior; Y/Y: 1.7%e v 2.1% prior.

- 15:00 (AR) Argentina Apr Wages M/M: No est v 3.4% prior.

- 16:30 (US) Weekly API Crude Oil Inventories.

- 19:50 (JP) Japan May PPI Services Y/Y: 3.3%e v 3.0% prior.

- 19:50 (JP) BOJ Summary of Opinions ( MPM).

- 21:30 (AU) Australia May CPI M/M: -0.4%e v +0.4% prior; Y/Y: 4.3%e v 4.2% prior.

- 21:30 (AU) Australia May CPI Trimmed Mean M/M: 0.3%e v 0.3% prior; Y/Y: 3.5%e v 3.4% prior.

- 22:00 (KR) South Korea May Retail Sales Y/Y: No est v 7.2% prior; Department Store Sales Y/Y: No est v 21.7% prior; Discount Store Sales Y/Y: No est v -6.6% prior.

- 22:30 (HK) Hong Kong to sell 5-year and 10-year binds.

- 22:35 (CN) China to sell 3-month bills.

- 22:35 (CN) China to sell 2-year and 30-year bonds.

- (JP) BOJ’s Himino.

- (US) Primary Elections in New York, Maryland, Utah.