Jun 23 ,2025
Synopsis:
Asia equities ended mixed Monday with most benchmarks closing well off their lows. Taiwan's Taiex and South Korea's Kospi still saw sharp drops while there were modest declines in Japan, Australia and Singapore. India is also in the red but off its lows. Greater China stocks gapped lower but rallied through the day to finish with solid gains. US futures down but off their lows, Europe opened with small losses since pared. Dollar DXY index stronger to recapture the 99 level but off highs, AUD at a month-long low, yuan weakened, yen fell to five-week low. Treasury yields higher across tenors, JGB yields mixed, CGBs steady. WTI and Brent futures around 2% higher but off peaks. Precious metals mixed. Base metals lower.
Risk appetite declined over the weekend following US strikes on Iran's nuclear facility to send equity markets, Asia currencies and sovereign yields all sharply lower at the open before staging a steady recovery through the day. Market reaction since Israel's initial attack still relatively muted despite oil price shock that is sending WTI and Brent close to YTD highs. However, analysts say Iran's response will be closely watched, especially if it targets shipping in the Straits of Hormuz, but today's market recovery seen as likely reflective of Tehran's limited retaliatory options. In a separate development, South Korea and Taiwan chip manufacturers underperformed on reports the US is considering revoking waivers for major chipmakers to target China's technology sector.
In other regional developments, Japan flash manufacturing PMI showed factory activity returned to growth despite new orders declining further. Australia's flash PMI also expanded thanks to services while India's initial reading showed the strongest expansion in more than 12 months. South Korea exports for the first 20 days of June grew, led by chips and autos. Singapore CPI dipped further in May. In political developments, Thailand's PM Shinawatra said she would not be resigning following a coalition meeting Sunday. In trade-related news, Japan-US tariff negotiations appear stuck, Vietnam authorities to visit US in coming weeks to secure deal, Malaysia and US pledged to reach an outline of an agreement before tariff deadline.
New World Development (17.HK) said it remained 'actively engaged' with creditors to refinance existing loans following earlier reports it was nearing a HK$87.5B ($11.1B) deal. China-based cobalt producers including Nanjing Hanrui Cobalt (300618.CH) and Zhejiang Huayou Cobalt (603799.CH) surged after the Congo government extended its export ban to September. Zhejiang Sanhua Intelligent Controls (2050.HK) stock fell on its market debut Monday following its HK$9.3B ($1.2B) listing, following declines on the grey market Friday. Kakaopay (377300.KS) is said to have filed a stablecoin trademark, stock surged.
Digest:
US airstrikes target Iranian nuclear facilities:
On Saturday, President Trump announced US dropped multiple 'bunker buster' bombs on Iran's Fordow, Natanz and Isfahan nuclear facilities (NY Times, Bloomberg). White House claimed strikes severely degraded Iran's nuclear program, though experts say could take weeks to fully assess extent of damage and there is some uncertainty surrounding whereabouts of enriched uranium stockpiles (Bloomberg, NY Times). Attention now firmly on extent of possible Iranian reprisal after its Foreign Minister Aragchi warned of consequences (Bloomberg). Key concern is whether Iran moves to disrupt crude shipments through Strait of Hormuz (Bloomberg). Iran's parliament voted to endorse measure closing it (Politico). However, such an action would require approval of Supreme Leader Khamanei and there have been persistent doubts Iran would carry out such an action give global consequences and likely harm to China (NY Times, Reuters). Some warnings US forces in neighboring countries could be targeted though so far Hezbollah indicated it would not join fight and Iran's other proxies have been weakened (NBC News). Trump his senior officials emphasized limited nature of strikes, though threatened further action if Iran retaliates or doesn't agree to peace (Reuters). Trump also mused about regime change.
Haven trades in focus after US strikes on Iran:
Crude oil and dollar index pared gains in Asia Monday after US strikes on Iran while gold defying bullish expectations on the back of haven demand (Bloomberg, Reuters). Risk aversion briefly took Bitcoin below $100K for the first time since May amid broad-based weakness in crypto. Ether also seen as a key barometer of risk appetite. Press noted equity price action so far indicating a sanguine outlook. Most Gulf stock markets were steady while Israel TA-125 was at a record high. Reuters cited historical analysis of Middle East tensions since the 2003 Iraq invasion which found S&P 500 initially languished but soon recovered to trade higher in the months ahead. Bloomberg cited thoughts the market will follow its historical pattern this time as well. Some uncertainties following recent equity stability with S&P 500 back within 3% of its all-time high. Viewed as mostly a reflection of expected localized conflict but volatility risks skewed to the upside if Iran actions impact the global economy, such as blocking Strait of Hormuz, or attacking US forces in the region. Also comes against the backdrop of investor fatigue over Trump headlines. Bloomberg suggested equities stand to be affected by oil volatility which has soared to the highest since Russia's invasion of Ukraine in 2022. Highlighted potential for directionality to be determined by options market. Some thoughts dollar support may be similarly fleeting against backdrop of diminished US exceptionalism.
US weighs fresh curbs against Asia semiconductor firms with factories in China:
Big-name semis under some pressure in Asian trade Monday after Reuters and other media sources noted US weighing revoking waivers for TSMC (~2330.TT~), Samsung Electronics (~005930.KS~) and SK Hynix (~000660.KS~) allowing them to ship US-made chipmaking equipment to their factories in China. Action would be part of Trump administration's latest attempt to target China's access to US technology, though White House official described it more as a fallback option if London trade truce fails. If carried out, action seen posing fresh risk to semiconductor supply chains while inflaming tensions not just with China but South Korea and Taiwan. South Korea Trade Minister Yeo Han-koo expressed concern with the reports, saying he would raise it with US officials in Washington this week (Reuters). US tech export restrictions played a role in recent flareup of trade tensions and said to have contributed to Beijing's slow walking on its promise to relax curbs on rare earths export licenses. Following London truce, press reports have discussed willingness by US and China to wield export controls against the other if tensions reignite.
Japan scraps US meeting over increased defense spending demands:
FT sources said Japan canceled a top-level meeting with US slated for 1-Jul after the Trump administration asked Japan to boost defense spending to 3.5% of GDP, higher than an earlier request for 3%. Latest demand was made in recent weeks by Pentagon official Elbridge Colby. One senior Japanese official said cancellation was also related to the 20-Jul upper house election as the LDP faces a loss of seats. In a follow-up story, chief Pentagon spokesman Sean Parnell told Nikkei that Europe now setting the global standard for US allies at 5% of GDP. Cited China's military build-up as well as North Korea's ongoing nuclear and missile developments that warrant Asia-Pac allies to match Europe's example. Japan Prime Minister Ishiba and South Korean President Lee Jae Myung were expected to attend the NATO summit in The Hague next week, where they will be under pressure to pledge more on defense spending. Article noted Japan defense spending currently at around 1.8% of GDP, aligning with plans set in 2022 to lift the share to 2% by FY27 which may translate to the world's third-largest defense budget behind the US and China. However, Fuji TV sources said Ishiba canceled the trip because a scheduled meeting between NATO and IP4 heads of state is no longer expected to take place, removing an opportunity to meet again with US President Trump.
South Korea exports rise in first weeks of June as BOK responds to market volatility:
South Korea customs service said exports expanded 8.3% y/y for first 20 days of June, reversing May's contraction, thanks largely to US tariff reprieve, surge in chip exports. Semiconductor shipments expanded by 21.8%, auto exports by 9.2%, steel exports by 1.6%; exports to US increased 4.3%, to EU by 24% while shipments to China decreased 1%, to Vietnam fell by 4.3%. South Korea export levy to US due to increase to 25% from 10% on 9-Jul amid absence of meaningful trade negotiations with presidential-level meeting at G7 cancelled last week. Data also comes days after launch of extra budget with direct support for sectors impacted by external trade shocks (Bloomberg) and amid warning from BOK monetary easing close to reaching peak effectiveness. BOK Monday said it would take market stabilization measures if "volatility heightens excessively" post US attack on Iran while finance minister said authorities would closely monitor financial markets, energy supplies (Reuters).
Notable Gainers:
+15.6% ~377300.KS~ (kakaopay): reportedly files stablecoin trademark
+5.2% ~6963.JP~ (ROHM Co.): to be added to Nikkei 225, effective 4-Jul
+0.6% ~4626.JP~ (Taiyo Holdings): Taiyo Holdings president/CEO Eiji Sato to step down, effective 21-Jun
Notable Decliners:
-3.3% ~2330.TT~ (TSMC): US reportedly considering revoking semiconductor waivers used by trading partners for their plants in China
-2.5% ~005930.KS~ (Samsung Electronics): US reportedly considering revoking semiconductor waivers used by trading partners for their plants in China
-1.6% ~9201.JP~ (Japan Airlines): Japan Airlines, Japan Airport Terminal and ANA Holdings will not tender AGP shares to Macquarie's offer
-0.4% ~8233.JP~ (Takashimaya): reportedly Q1 operating profit expected to be around ¥13.0B, (20%) y/y
Data:
Economic
Japan June
Flash manufacturing PMI 50.4 vs 49.4 in prior month
Services PMI 51.5 vs 51.0 in prior month
Composite PMI 51.4 vs 50.2 in prior month
India June
Flash manufacturing PMI 58.4 vs 57.6 in prior month
Services PMI 60.7 vs 58.8 in prior month
Composite PMI 61.0 vs 59.3 in prior month
Singapore May
CPI +0.8% y/y versus consensus +0.9% and 0.9% in prior month
Core CPI 0.6% y/y versus consensus 0.6% and 0.7% in prior month
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