Global Market Quick Take: Asia – June 20, 2025

Global Market Quick Take: Asia – June 20, 2025

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Key points:

• Macro: Trump to decide in 2 weeks whether to strike Iran
• Equities: Dax, Nikkei and HSI fall across the board
• FX: Mixed trading in the USD overnight. GBPUSD gained after BOE held rates.
• Commodities: Gold and Silver pulls back while Crude trades near 5 month high of $75
• Fixed income: SNB and Norges cuts rates while BoE remains unchanged

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Disclaimer: Past performance does not indicate future performance.

Macro: 

• Iran held direct talks with the US amid the Israel conflict, as reported by Reuters. Iran's Foreign Minister spoke with Trump's envoy, stating talks would resume if Israel stopped attacks. Trump demanded Iran end uranium enrichment. A diplomat mentioned Iran might be flexible on the nuclear issue if the US pressured Israel to stop the war.
• SNB cut its policy rate by 25 bps to 0% in June 2025, due to easing inflation and a weak global outlook. Swiss consumer prices fell by 0.1% in May. The SNB forecasts inflation at 0.2% for 2025, 0.5% for 2026, and 0.7% for 2027. Swiss GDP grew in Q1 2025, aided by early US exports, but growth is expected to slow, with forecasts of 1% to 1.5% for 2025 and 2026.
• Norges Bank cut its key rate by 25 bps to 4.25% in June 2025, defying expectations of a hold. The bank indicated more cuts could follow if the economy aligns with expectations, but uncertainty prevents committing to a specific path.
• BoE voted 6-3 to keep the Bank Rate at 4.25% in June, amid global uncertainty and inflation. Three members wanted a 0.25% cut. Inflation is expected to stay steady this year and ease next year, but risks include rising energy prices and potential US tariffs. UK GDP growth is weak, and the labour market is loosening.
• Australia's unemployment rate stayed at 4.1% in May 2025, as expected. Unemployed numbers dropped by 2,600 to 618,300, with full-time seekers down 16,100 and part-time seekers up 13,500. Employment fell by 2,500 to 14.62 million, missing the forecasted 25,000 increase.

Equities:

• US - Closed
• Europe- DAX dropped 1.1% to 22,057 on Thursday, its lowest since early May, amid investor concerns over potential US intervention in the Middle East. Aerial attacks between Israel and Iran continued, with President Trump undecided on joining Israel in strikes on Tehran. Stora Enso shares soared nearly 15% after announcing a review of Swedish forest assets. Manadatum fell 5% as Altor reduced its stake in the company.
• Hong Kong - HSI fell 2.0%, nearing a three-week low. Caution prevailed ahead of the PBoC's rate decision, but hopes for July stimulus measures from China's legislature offered some relief. Major laggards were Pop Mart (-5.7%), JD Health (-5.0%), Trip.com (-4.1%), and Meituan (-3.8%).
• Japan - Nikkei 225 fell 1.02% to 38,488, ending a three-day rally due to rising geopolitical risks affecting investor sentiment. Advantest (-2.4%), Disco (-3.3%), Tokyo Electron (-3%), Sony Group (-2.5%), and Toyota Motor (-1.7%) saw significant declines. This morning, Japan core CPI for May came in at 3.7%, higher than the estimated 3.6%, paving the way for a more hawkish BOJ down the road.

Earnings this week:

FX:

• AUDUSD fell to 0.648 after labour market data hinted at potential RBA policy easing. GPBUSD trading above 1.3450 as the BoE maintained rates amid inflation and geopolitical concerns. CHF steady at 0.82 per US dollar, near its strongest since 2011, with investors seeking safe havens amid Middle East tensions. The Japanese yen slipped past 145 per dollar, nearing three-week lows due to a stronger US dollar.

Commodities:

• WTI crude oil futures trades around $75 per barrel on Thursday, slightly below a five-month high, after President Trump announced a decision on US involvement in the Israel-Iran conflict within two weeks, easing immediate supply shock fears. Earlier, missile exchanges between Israel and Iran had raised concerns about tanker traffic disruption through the Strait of Hormuz.
• Gold dropped to approximately $3,350 per ounce on Thursday, reaching a one-week low as investors sold bullion to offset losses in other areas amid rising Middle East tensions and Silver drops to $36.40 per ounce.

Fixed income:

• BoE held rates at 4.25% with a 6–3 vote, as expected. Dhingra, Taylor, and Ramsden voted for a cut. Governor Bailey clarified the gradual rate decrease statement wasn't a prediction for August. Norges Bank unexpectedly cut rates by 25bps to 4.25%, indicating further reductions in 2025 if the economy aligns with projections. SNB cut its rate by 25bps to 0%, reiterating readiness to intervene in FX markets if needed.

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