US strikes Iran harder than night before

Asia market update: US strikes Iran harder than night before; Hynix’ Fri US IPO 7x oversub’d; CN tech strength continues as CN CPI eases - possible peaking signs; JP Fast Retailing EPS in focus.

General trend and developments

-US forces hit a further 90 Iranian targets today on top of yesterday’s ~80. Iran’s promised retaliation amounted to two attacks on US bases in Bahrain and Kuwait, causing civilian property damage and minor injuries in Bahrain, while no damage has been reported in Kuwait.

-Both the Nikkei and Kospi initially bounced back today - following the Nasdaq’s turn-around later in the NY session to be up on the day, despite the Kospi down more than -5% yesterday and the escalation in Middle East hostilities along with Pres Trump’s comments that the US-Iran ceasefire was over. However, only the Nikkei held onto gains today to outperform Asia as Kospi volatility continued.

-SK Hynix' US IPO of its ADRs on Friday said to be oversubscribed by >7x, with the offering itself to produce another $28-29B liquidity suck out of the US tech equity market.

-Taiwan and South Korea officials are wearing different types of glasses when it comes to viewing AI bubble risks. Taiwan’s Central Bank warning about concerns of an AI bubble even as Korea keeps the pedal to the floor for its own AI chip-related boom.

-In China tech news Nvidia finally said to win approval for top Chinese AI firms to purchase some of its H200 chips but likely only for training on public data, not sensitive customer information. China memory-maker CXMT IPO on July 16th to raise CNY29.5B, which would be the largest mainland China IPO since 2022. Open-source AI modeler Zhipu (Z.AI) priced a secondary offering for approx HK$31.4B. Alibaba's Q1 FY27 results preview said to show that overall e-commerce business profits have resumed growth.

-Meanwhile the Hong Kong Monetary Authority (HKMA) overnight lending to banks climbed to highest since February, with the flood of tech-related capital raises may be putting pressure on money markets.

-China’s CPI came in a touch softer than expected, and only half the PBOC’s target 2%, while PPI prices remained elevated above 4%, further squeezing Chinese firms' margins. The softness may give the PBOC some room to ease in the future, despite the recent ‘language change’ by the central bank. Drivers of the PPI data included higher prices related to coal, electrical machinery, electronics and ferrous metals, while other factors included the low base effect and imported inflation related to Iran.

-Japanese yield curve was more muted today prior to the 5-year JGB auction, which despite being reasonably well supported did mark a brief turn up across the curve as the long-end steepened and the 10-year benchmark up to fresh 30-year highs.

-Japan BOJ chances of rate hikes mostly unchanged on the overnight OIS swaps, with a hike by October seen at a 65.5% chance vs 63% chance day before. However, Former BOJ official Watanabe believes that the BOJ may well hike beyond 2% in this cycle - higher than most people currently expect.

-New Zealand June PMI rose by a whopping 8 big handles to nearly 60, the fastest expansion since New Zealand came out of Covid lockdowns in 2021. RBNZ Gov Breman in follow up comments today following the central bank’s first hike in more than 3 years yesterday, reiterated that the NZ neutral rate is around 3%.

-USTR confirmed to work with US Treasury and the Commerce Dept to present Pres Trump with a '“menu” of Spanish products that may be subject to a trade embargo in the coming days. Follows Trump's NATO visit and his stated displeasure towards Spain's leftist government refusing to accommodate US forces during the Iran conflict. Products that may be embargoed could include Spanish wine, olive oil and other agricultural products, apparel (Zara - ITX.ES), footwear and machinery.

-Major Nikkei component Fast Retailing and Seven & i earnings due after the Tokyo close.

-US equity FUTs +0.3% to +0.4% during Asia trading.

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

-Thu July 9th: MY Rate Decision, (Wed night, EU ECB Meeting Minutes, US Jun Existing Home Sales).

-Fri July 10th: JP Jun PPI, US IEA Monthly Report.

Holidays in Asia this week

-Fri July 10th: New Zealand.

Headlines/economic data

Australia/New Zealand

-(AU) ASX 200 opens -0.8% at 8,717.

-(NZ) New Zealand Jun Manufacturing PMI: 59.7 v 51.3 prior (moves sharply back into expansion, the fastest expansion since 2021).

-(AU) Australia's APRA: Completed its review of guidelines on recognition of an external credit assessment institution.

-(NZ) RBNZ Gov Breman: Reiterates that the neutral OCR range is centered around 3%; Have to read economy to asses where the neutral rate is - radio interview comments.

-(NZ) New Zealand PM Luxon: New Zealand will engage with Australia and Fiji on the possibility of joining the 'Ocean of Peace' alliance - Statement.

-(NZ) New Zealand will not proceed with blanket legislative ban on ‘crypto ATMs’ as the cabinet has instead agreed to focus on the area of virtual assets; cites NZ Associate Justice Min Nicole McKee – US financial press.

-(NZ) New Zealand Jun ANZ: The Light Traffic Index (LTI) fell 0.5% in June and is down 0.4% y/y, reflective of the impact of higher fuel prices. More positively, the Heavy Traffic Index (HTI) rose 1.8% in the month, and is up 1.3% y/y - update.

China/Hong Kong

-(CN) Shanghai Composite opens +0.2% at 3,977; (HK) Hang Seng opens 'little changed' at 24,181.

-(CN) China Pres Xi: Confirms to speed up tech self-reliance; To take more forceful steps in tech development; China to focus on sectors including AI and chips - comments from National Science and Tech Conf [EU market close].

-(CN) China Jun CPI Y/Y: 1.0% v 1.1%e.

-(HK) HKMA overnight lending to banks climbs to highest since February, 2026 at HK$2.7B - (update).

-(CN) US Senate Committee will reportedly vote next week on a bill to toughen US Govt ban on Chinese automakers from entering the US market - press.

-(CN) China sees urban job growth to remain strong in the next 5 years - Xinhua.

-(CN) China interbank bond market regulator to curb short-term bond issuance by local government financing vehicles (LGFV) - Sources.

-(CN) China Commerce Ministry (MOFCOM) announces issuance of guidelines to 'promote' it's retail sector.

-(CN) According to a tier 1 US broker, the China PBOC ‘language tweak’ suggests a measured easing stance, notes the newly added reference to ‘structural divergence’ among domestic challenges – US financial press.

-(CN) CXMT.IPO *Files IPO prospectus on the Shanghai Stock Exchange; to open Star Market IPO subscriptions on Jul 16th; confirms to raise CNY29.5B [said to be the largest mainland China IPO since 2022].

-(CN) China companies use rare earths ban to squeeze out foreign rivals - FT.

-(CN) China issuer rating exit adds to credit transparency risk – China Securities Journal.

-(CN) Follow Up: The US said China gave ‘only hours’ warning before the previously reported Pacific submarine missile launch - SCMP.

-(CN) Asian Development Bank (ADB) affirmed China 2026 GDP growth forecast - Press [update].

-(CN) China has opened its first ‘unmanned’ AI-driven R&D lab in Shanghai – Chinese press [update].

-CN) China adds HPV vaccine to national immunisation program for girls - press.

-(HK) Chip and AI-related names continue to drive the Hang Seng TECH index higher, inline with Wed’s session; Zhipu +14.6%, Hua Hong +8.2%, Lenovo +7.4%, SMIC +6.2%, Alibaba +4.9%, Xiaomi +3.1%, MiniMax +4.1%, Tencent +1.1%.

-(HK) Bank of China HK and HSBC raise mortgage cash rebates in Hong Kong – local press.

-(HK) 2513.HK *Prices 19.78M H-shares in secondary offering at HK$1,588/H-share for gross proceeds at approximately HK$31.4B.

-(HK) Nexchip Semiconductor sets Hong Kong offer price at the top end of the guided range of HK$30-32.30/share.

-(CN) China PBOC sets the yuan mid-point at 6.8036 v 6.8077 prior (strongest level since 10th February, 2023).

-(CN) China PBOC Open Market Operation (OMO): Sells CNY10B in 7-day Reverse Repos; Net drains CNY279B v drains CNY85B prior.

Japan

-(JP) Nikkei 225 opens +0.3% at 67,044.

-(JP) Former BOJ Official Tsutomu Watanabe: BOJ may push policy rate higher than 2% during this cycle - US financial press.

-(JP) Japan sells ¥2.5T vs. ¥2.5T indicated in 5-year JGB bonds; Avg yield: 2.0200% v 1.9050% prior; Bid-to-cover: 3.43x v 3.11x prior.

-(JP) Japan Jun M3 Money Supply Y/Y: 1.5% v 1.7% prior.

-(JP) Japan releases weekly flows data [period ended July 3rd]: Foreign buying of Japan equities: -¥22.2B v -¥1.82T prior; Japan buying of foreign bonds: -¥218.1B v -¥277.5B prior.

-(JP) Japan Jun Tokyo Avg Office Vacancies: 2.0% v 2.1% prior [multi-year low].

-(JP) 2914.JP Japan Health Ministry postpones strengthening regulations on heated tobacco - NHK.

Korea

-(KR) Kospi opens +3.3% at 7,486-(KR) SKHY US offering is said to be more than 7x oversubscribed - US financial press.

-(KR) South Korea regulators said to consider tightening investment thresholds for single-stock leveraged ETFs for Samsung and SK Hynix - Korea press (update).

-(KR) Bank of Korea (BOK): To continue making market stabilizing efforts - comments in report submitted to Parliament committee.

-(KR) Bank of Korea (BOK) Gov Shin: In discussions with other Central Banks all the time to discuss markets; South Korea FX market does not have liquidity shortage issues; See strong chances of the Won gaining against the Dollar.

-(KR) South Korea Official: Won weakness is temporary - Daily.

-(KR) IMF raises South Korea growth the highest among major economies due to AI, chip boom; raised South Korea 2026 GDP growth forecast from 1.9% to 2.6% - South Korea press (update).

-(KR) South Korea Jun Total Bank Lending to Household (KRW): 1.189T v 1,182T prior.

-(KR) South Korea sells €1.7B of 3-year and 7-year FX stabilization bonds at lowest-ever spreads.

Other Asia

-(TW) Follow up: Taiwan Central Bank Gov: We do have concerns about the possibility of an AI bubble - comments at legislative meeting.

-(TW) Taiwan Central Bank Gov Yang: Taiwan's solid economy can withstand strong USD; We are unconcerned about a strong USD - comments at legislative meeting.

-(TH) Thailand Vice Fin Min Santitarn: Government aims to raise investment rate in GDP from 22-23% to 30%; We are pushing or reforms and aim for membership in about 3 years.

-(TH) Thailand's Baht weakens to as much as 33.565/USD, lowest level since May 2nd, 2026.

-(TH) Thailand Jun Consumer Confidence: 50.7 v 49.5 prior.

-(TH) NESN.CH Thailand approves $688M inevstment in coffee factory within country.

-(ID) Indonesia final May Retail Sales Y/Y: -3.9% v -3.2%e.

-(ID) Indonesia's Rupiah weakens to 18,075/USD in early trade.

-(ID) Indonesia Ministry of Communication and Digital Affairs warns Qantas, Accor, others over digital registration.

-(MY) Malaysia May Industrial Production Y/Y: 8.4% v 9.4%e.

North America

-(US) FOMC Jun Minutes: Member concurred statement would convey commitment to dual mandate goals and emphasize the FOMC will deliver price stability [US market close].

-(US) White House: $3B in defense deals, JVs announced at NATO Summit.

-(US) President Trump: Great unity today, I think NATO came a long way today, meeting today settled a lot of things; US troops in Europe will depend on Greenland, Iran; Europe wants to help on Iran; Bigger fan of Save America, I'll make a decision on Housing Bill - remarks on new Air Force One.

-(US) IMF: Cuts 2026 global growth forecast to 3.0% from 3.1%, raises 2027 to 3.4% from 3.2% [EU market close].

-(US) Treasury's $39B 10-Year Notes reopening draws 4.580% v 4.538% prior; Bid-to-cover ratio: 2.59x v 2.57x prior and 2.56x over the last 8 reopenings [US market close].

-(US) MBA Mortgage Applications w/e July 3rd: -2.2% v 0.0% prior [US market close].

-(US) DOE Crude: +3.0M v -1.5Me; Gasoline: -1.9M v -1.5Me; Distillate: -5.0M v +1.0Me [US market close].

-(US) May Final Wholesale Inventories M/M: 0.1% v 0.3% prelim [US market close].

-(US) May Consumer Credit: -$0.18B v $17.5Be [US market close].

-(US) Fed Chair Warsh to testify at the Senate Banking Panel hearing on Jul 15th.

-(US) President Trump boards new Air Force One gifted by Qatar in the United Kingdom.

-(US) Pres. Trump: We just landed and met up with our new Air Force One, which was sent earlier to RAF Mildenhall, so we could show the wonderful Servicemembers, as per the entire Base’s request - post on Truth Social.

-(US) PSKY US States could sue to block Paramount-Warner Bros deal as soon as next week - Sources.

-(US) Maine Senate Democratic nominee Graham Platner suspends election campaign (as expected) - Punchbowl.

-(US) White House: $3B in defense deals, JVs announced at NATO Summit.

-(CL) Chile Jun CPI M/M: 0.0% v -0.2%e; Y/Y: 4.3% v 4.1%e [US market close].

-(VE) Venezuela Interim President Delcy Rodriguez: Venezuela sets 61 camps for 17,000 displaced after earthquakes; Venezuela earthquake death toll reaches 3,811 - speaks on State TV.

Europe

-(RU) Russia Dep PM Novak: Russia has introduced a diesel exports ban; We're going to begin importing fuel later this month; We've also capped commodity exchange fuel prices [EU market close].

-(RU) Follow up: Russia fuel crisis spills over to Central Asia, noting higher-octane gasoline shortages in Kyrgyztan, rising prices in Uzbekistan, and tightening controls [to protect their own market] in Kazakhstan – Nikkei.

-(UR) NATO members commit to providing military aid to Ukraine through 2027 to at least 2026 levels [US market close].

-(ES) US Official: US Treasury will work with USTR, Commerce Department to present Trump with a menu of Spanish products that may be subject to a trade embargo in coming days.

-(EU) US Pres Trump: Doesn't believe the war with Iran will recommence; Anything that happens will be over quickly; Lockheed Martin will establish a sustainment facility in Europe; We'll give companies up to two years to build in the US; If not, they must pay up to 250% tariff [US market close].

-(EU) ECB’s Nagel (Germany): After today’s Iran news, we’re back where we began; I don’t know what we will do at July meeting; Will also meet in Sept [EU market close]-(EU) NATO Sec Gen Rutte: NATO to spend €27B to upgrade fuel supply lines; Alliance is more together than ever [EU market close].

-(ES) Reportedly US Pres Trump has been provided a list of Spanish goods to consider for an embargo - WSJ [US market close].

- (PL) Poland Central Bank (NBP) leaves base rate unchanged at 3.75%; As expected [EU market close].

- (IE) Ireland Jun Live Register Monthly Change: +0.4K v +0.9K prior [EU market close].

-(UK) UK issues electricity supply warning as heat wave strains grid [the warning is said to be rare for the summer].

-(UK) Jun RICS House Price Balance: -33% v -30%e.

Middle East

-(IR) CENTCOM: Forces complete another round of strikes against Iran on July 8th, 2026; Strikes follow successful strikes in Iran the night before; Forces struck about 90 Iranian military targets.

-(IR) Pres Trump: We may resume the blockade on Iran; Will probably hit Iran again tonight; It’s not about regime change, it’s about nuclear weapons; Don’t know if we’ll have Iran deal; Even if we make a deal, it may not stick [US market close].

-(IR) Iran State Media reports that Iran will reportedly threatens to close the Strait of Hormuz in the event of fresh attacks on its native land; Iran will strike the enemy targets at a ratio of 'at least two to one' - press [EU market close].

-(IR) Iran Deputy Foreign Min: Iran must speak to Trump in his own language as he understands the language of force better [EU market close].

-(IR) The Iran global inflation ‘crisis’ that stubbornly refuses to happen - FT.

-(IR) Iran's Top Negotiator Ghalibaf: Strait of Hormuz will only open with 'Iranian arragements, not with American threats' - post on X.

-(IR) Pres. Trump: Iran strikes is in retribution for yesterday’s bombing of ships by Iran.

-(IR) Reportedly Iran to launch 'large-scale retaliatory' operations on US bases in the region shortly - Iranian press.

-(IR) IRGC: [Confirms] Attacked two US bases in Kuwait, two US bases in Bahrain.

-(IR) Sirens sounded in Kuwait [no initial reports of damage] - state news agency.

-(IR) Follow up: Bahrain Interior Ministry: Sirens sounded in Bahrain; Warning also sent to mobile phones in Qatar.

-(IR) Iran's Mehr: Explosions heard in Iran's Southeastern city of Iranshahr.

-(SA) US Sec of State Rubio to meet with Saudi Ambassador to US at 12pm ET Thursday.

Levels as of 01:20 ET

Nikkei 225 +1.3%; ASX 200 -0.5%; Hang Seng -1.2%; Shanghai Composite -0.2%; Kospi -1.0%.

Equity S&P500 Futures +0.3%; Nasdaq100 +0.4%; DAX +0.7%; FTSE100 +0.5%.

EUR 1.1434-1.1414; JPY 162.62-162.36; AUD 0.6941-0.6925; NZD 0.5729-0.5692.

Gold -0.2% at $4,067/oz; BTC -0.5% at $62,341; WTI Crude Oil +1.4% at $74.52/bbl; Copper flat at $6.1200/lbs.