Global Market Quick Take: Asia – June 23, 2025

Global Market Quick Take: Asia – June 23, 2025

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Key points:

• Macro: US ready for more strikes if Iran does not engage in diplomacy
• Equities:  US futures 1% lower after US strikes Iran over the weekend
• FX: USD gains as safe haven; EUR steady; JPY weak due to oil
• Commodities: Oil rises 3% post-US strikes; Strait disruptions concern OPEC
• Fixed income: Treasury futures rise; Japan bond market awaits issuance cuts

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Disclaimer: Past performance does not indicate future performance.

Macro: 

• US President Trump announced the initiation of "Operation Midnight Hammer," which included targeted attacks on Iran's nuclear sites at Fordow, Natanz, and Isfahan. He cautioned that additional targets are still under consideration, stressing that while the US does not seek regime change, it is prepared to conduct more extensive strikes if Iran does not pursue diplomatic engagement.
• Iran's parliament approved closing the Strait of Hormuz after US strikes on nuclear facilities, pending security body approval. US Secretary of State Rubio warned it would be "economic suicide" for Iran but is a credible escalation.
• Philadelphia Fed Manufacturing Index remained unchanged at -4.0 in June 2025, matching May's figure and missing market expectations of -1. This suggests continued subdued manufacturing activity in the region, with signs of slowing demand and weakening labour market conditions.
• Preliminary estimates indicate Canadian retail sales likely fell by 1.1% in May 2025, marking the steepest decline since March 2023. This suggests increased tariffs from the United States are prompting consumers to reduce spending.
• FDI in China dropped 13.2% year-on-year to CNY 358.19 billion (USD 49.88 billion) from January to May 2025. Manufacturing attracted CNY 91.52 billion, services CNY 259.64 billion, and high-tech industries CNY 109.04 billion, with notable growth in e-commerce services (146%), aerospace and equipment manufacturing (74.9%), chemical pharmaceutical manufacturing (59.2%), and medical equipment manufacturing (20%).

Equities:

• US - On Friday, the S&P 500 slipped 0.2%, marking its third consecutive loss, as investors considered potential Federal Reserve rate cuts amidst Middle East geopolitical tensions. The Nasdaq fell 0.5%, while the Dow rose by 35 points. Geopolitical uncertainty grew as President Trump postponed decisions on US involvement in the Israel-Iran conflict, while Israel increased strikes on Iranian targets. However, over the weekend, the US unexpectedly struck 3 of Iran’s nuclear sites with bunker-busting bombs using B-2 bombers and we await this morning for Iran’s potential retaliation to the attack, including a possible closure of the Straits of Hormuz. S&P 500 futures opened about 1% lower this morning.
• EU - On Friday, the STOXX 50 rose 0.6% and the STOXX 600 gained 0.1%, ending a three-day losing streak that had pushed them to their lowest in nearly two months. European and Iranian officials will meet in Geneva for the first high-level talks since the conflict began. Travel and leisure stocks led gains, while energy shares declined. Top performers included Kering (2.8%), Unicredit (1.8%), Societe Generale (1.6%), and STMicroelectronics (1.6%), whereas Repsol (-0.5%), Eni (-0.3%), and Iberdrola (-0.3%) fell.
• HK - On Friday, the Hang Seng rose1.3% to 23,530, recovering from a three-day losing streak with widespread sector gains. The index rebounded from a three-week low after the PBoC kept lending rates steady following May's cuts to counter rising U.S. tariffs. Sentiment improved as the U.S. downplayed joining Israel in strikes on Iran. Despite this, the Hang Seng fell 1.5% for the week, its first weekly drop in three weeks and the steepest since early April, after the Fed highlighted inflation risks, suggesting slower rate cuts in 2026 but allowing for two this year. United Laboratories gained 2.2% after a $180 million payment from Novo Nordisk. Other top gainers were Sunny Optical Tech (4.2%), Mixue Group (3.1%), and SMIC (1.9%).

Earnings this week:

• Monday: Commercial Metals (CMC), FactSet (FDS), KB Home (KBH)
• Tuesday: Carnival Corporation (CCL), FedEx (FDX), BlackBerry (BB),
• Wednesday: General Mills (GIS), Micron (MU), Jefferies (JEF),
• Thursday: Walgreens Boots Alliance (WBA), Nike (NKE), American Outdoor Brands (AOUT)

FX:

• USD strengthened in early trading as investors sought safe-haven assets following US strikes on Iran, leading to modest gains against the euro and other major currencies. Dollar index rose to above 98.90.
• EUR remains unexpectedly strong in early trading. The euro has not fallen below last week's low of 1.1446, which would indicate a more significant dollar strength.
• JPY weakened to above 146.20 against the dollar and reduced gains against the euro, despite the dollar's broad strengthening. This is unexpected, as the yen is usually a safe haven. Rising oil prices, which worsen Japan's trade terms as a major net oil importer, likely explain the yen's weakness.
• Economic data – Germany HCOB Manufacturing PMI Flash, UK S&P Global Manufacturing PMI Flash, ECB President Speech, US Existing Home, US S&P Global Composite PMI Flash

Commodities:

• Oil prices rose sharply after US strikes on Iran, with Brent crude up 3% to $79.20 a barrel. Concerns about disruptions in the Strait of Hormuz and crude flows from Middle Eastern producers have increased, focusing attention on OPEC and its allies.
• Gold prices rose in Asia following US and Israeli attacks on Iran, initially climbing 0.8% before reducing gains. Spot gold increased by 0.2% to $1,375, nearing its record high by $125.

Fixed income:

• US Treasury futures rose slightly as oil price gains were reduced following US strikes on Iran. Investors await Japan's bond market reaction to planned cuts in super-long tenor issuance. Treasury 10-year futures are steady at 111, while 30-year futures increased 6/32 to 117 2/32.

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