Markets react positively to Trump announcement of Iran-Israel ceasefire

Asia market update: Markets react positively to Trump announcement of Iran-Israel ceasefire, now waiting to see if it holds; Focus on US Fed Powell Testimony following dovish Fed member-speak.

General trend

- Crude Oil prices collapsed 9% during the US afternoon as Pres Trump confirmed that Iran telegraphed its ‘retaliatory strike’ against US military assets in Qatar, and that no Americans or Qataris were harmed with hardly any damage. Markets took that as a sign that Iran had ‘saved face’ and thus there may be no more coordinated attacks from the Iran side.

- Oil crashed a further 4% to the $64 handle shortly after the Asian reopening as Trump unexpectedly posted that that there will be a phased-in ceasefire between Israel and Iran, starting around midnight ET (04:00 GMT), with Iran starting a ceasefire, and then after another 12 hours Israel will start a ceasefire, “at which point the War will be considered, ENDED!”. The ceasefire agreement was later confirmed by senior Qatari and Iranian officials. (Note: Israel has not directly recognized the ceasefire yet, only through a US official).

- Last minute confusion ahead of Trump’s deadline as Iran and Israel traded attacks right up to and slightly past the deadline.

- Asian stocks sharply higher at the open on the Trump announcement, led by Kospi +3.3% (Hynix +8.3%, Samsung +4%), eating further towards its prior 2021 all-time-highs. Shanghai Composite 3-month high and Hang Seng +1.9% (biggest one day gain in five weeks).

- Bitcoin kept recovering from its $98K low on Monday to hit $106K. Gold lost its safe haven attraction, falling to two-week lows, while currencies gained back lost ground and more against the Greenback yesterday, with the Euro retaking 1.16, just shy of 2021 highs. Meanwhile JPY’s steep fall against the dollar yesterday saw an even steeper recovery today, all the way back from 148 to 145.5 – back at its level last Friday. CHF/JPY also -78 pips.

- Japan PM Ishiba’s late evening press conference yesterday turned out to be focused on economic policy ahead of key Upper House elections on July 20th, promising measures to increase GDP to ¥1,000T by 2040 from current ¥600T, incl. real wage gain growth of >1% or more and a win-win US-JP trade deal. His anticipated comments on US-JP defense agreements (following the Japan cancellation of the July 1st US 2+2 security meeting, and his pulling out of the NATO Summit this week) were limited to countering the US demand for Japan to spend >3.5% spent on defense by simply saying “numerical target should not come first for defense budget”.

- Japanese media speculate that there is in fact some discord in the US-Japan alliance. [** A reminder that the Ishiba-Trump relationship did not start off on a good footing, with Trump delaying meeting Ishiba until Feb 6-8th, two months after his election win.].

- Overnight the Japan MOF said a majority of bond participants supported the revised JGB issuance plan (reduced to ¥200B per quarter from Mar 2026).

- Japan's 20-year bond auction was much better than last month (which had the worst tail since 1987), with a bid-to-cover of 3.11x (strongest since Mar) much better than May's 2.50x, although still slightly below the 12-month average.

- CFTC Japanese Yen net long positions last week continued to pull back from their record ~179K contacts as at Apr 29th, now down to +130.9K contracts Net long as at Jun 17th.

- A senior US official warned that China-backed AI co Deepseek was providing AI support to China military and intelligence services, and tried to use shell companies in SE Asia to avoid US export controls.

- Australia Port Hedland May Iron Ore exports significantly higher, including to China.

- Focus on US Fed Powell Testimony following dovish member-speak from Bowman and potentially Goolsbee joining Waller last week as possible dissenters that may request a cut at the next Fed meeting end-July.

- US equity FUTs +0.6% to +0.8% during Asian trading.

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

- Tue Jun 24th (Tue eve DE Jun Ifo Business Climate, Tue night US Fed Powell Testimony).

- Wed Jun 25th NZ May Trade Balance, JP Summary of Opinions, AU May CPI, BOJ Tamura TH Rate Decision, (Wed night US Fed Powell Testimony).

- Thu Jun 26th KR Jun Business Confidence, (Thu night US Final Q1 GDP, US May Durable Goods).

- Fri Jun 27th JP May Retail Sales, (Fri night US May Core PCE).

Holidays in Asia this week

- Fri Jun 27th Malaysia, Indonesia.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.7% at 8,530.

- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence: 86.7 v 85.4 prior.

- Australia Port Hedland May Iron Ore Exports: 53.1Mts, +14% m/m; iron ore exports to China 45.3Mts, +10.2% m/m.

- New Zealand Treasury: Maintaining economic momentum "may be challenging" - comments in fortnightly update.

- RBNZ: New Zealand May Credit Card Spending M/M: +0.7% v -1.4% m/m; Y/Y +2.2%.

China/Hong Kong

- Hang Seng opens +0.6% at 23,832; Shanghai Composite opens -0.1% at 3,380.

- China Central Bank Advisor Huang Yiping: China Q2 GDP likely >5% - Summer Davos comments in China.

- Former PBOC official Zhu Min: Expects 100 'Deepseek-type' products in China in 18 months.

- Starbucks: Reportedly considers full sale of Chinese business, has been talking with potential partners - Chinese press.

- White House NEC Dir Hassett: No reason for Fed not to cut rates; Pres Trump and Fed's Waller are right about rates; Treasury Sec Bessent and USTR Greer in constant contact with China - CNBC.

- WTO dispute resolution arm agrees to establish panel devoted to China's additional import duties on agricultural and fishery products from Canada - press cites trade official.

- BYD 1211.HK; Said to be subsidizing China auto retailers at CNY666 (~$93) per car sold - Chinese press.

- (US) Senior US official: Deepseek said to be providing AI support to China military and intelligence services; DeepSeek tried to use shell companies in SE Asia to sidestep US export controls.

- China MOF sells 30-year Special Sovereign Bonds at 1.8477% v 1.8840% (Jun 6th).

- China PBOC sets Yuan reference rate: 7.1656 v 7.1710 prior (strongest since Nov 8th).

- China PBOC Open Market Operation (OMO): Injects CNY407B in 7-day reverse repos; Net injects CNY209B v drains CNY22B prior.

Japan

- Nikkei 225 opens +1.1% at 38,775.

- Japan sells ¥1.0T VS. ¥1.0T indicated in 20-year JGB bonds; AVG yield: 2.3640% V 2.4530% prior; bid-to-cover: 3.11X V 2.50X prior (Strongest bid to cover since Mar).

- Japan Trade Negotiator Akazawa: Said to be arranging next US visit from Jun 26th (Thursday) ; Not yet confirmed - financial press.

- Japan Finance Ministry (MOF): To reappoint top FX diplomat Mimura for 2nd year.

- Japan Fin Min Kato: Reiterates has seen sharp rise in super-long JGB yields [comments ahead of 20-year JGB auction].

- Japan Finance Ministry official: Majority of participants at investor meeting supported the revised JGB issuance plan - comments after virtual meeting with bond market participants.

- Japan PM Ishiba: To increase Japan GDP to ¥1,000T by 2040 from current ¥600T; To seek real wage gain growth of 1% or more; Will work towards win-win trade deal in discussions with US - comments to media.

- Japan PM Ishiba confirms to cancel attendance at NATO summit – press.

Korea

- Kospi opens +1.5% at 3,061.

- South Korea Jun Consumer Confidence: 108.7 v 101.8 prior.

- South Korea Trade Ministry: South Korea and US trade reps reaffirm commitment to reaching a tariff deal "early".

- Acting US Ambassador to South Korea Joseph Yun: There may be new trade consultations about a South Korea - US Free Trade Agreement - financial press.

Other Asia

- (MY) Malaysia May CPI Y/Y: 1.2% v 1.4%e (10th month below target range and slowest since Feb 2021).

North America

- (US) Follow Up: White House Official: Israel agreed to ceasefire so long as Iran does not launch further attacks.

- (US) Follow Up: President Trump said he expects the ceasefire to last 'forever' - NBC News.

- *(IR) US Pres Trump: It has been fully agreed by and between Israel and Iran that there will be a Complete and Total CEASEFIRE, for 12 hours, at which point the War will be considered, ENDED!

- (IR) US Pres Trump: Iran has officially responded to our Obliteration of their Nuclear Facilities with a very weak response, which we expected, and have very effectively countered - Truth Social post.

- (US) White House NEC Dir Hassett: No reason for Fed not to cut rates; Pres Trump and Fed's Waller are right about rates; Treasury Sec Bessent and USTR Greer in constant contact with China - CNBC.

- (IR) Reportedly US Officials anticipate Iran's retaliation against US forces will come in the next day or two; US is still pursuing diplomatic resolution; Threat is currently under assessment - press.

- (US) US Pres Trump: everyone, keep Oil prices down. I’m watching! you’re playing right into the hands of the enemy; don’t do it! - Truth Social post.

- (IN) India and US said to attempt to finalize interim trade deal by July 9th - Indian press.

- (US) Jun preliminary S&P Manufacturing PMI: 52.0 V 51.0E (6th month of expansion); Tariffs blamed for ongoing rising services and manufacturing prices.

- (US) May existing home sales: 4.03M V 3.95ME.

- (US) Fed's Bowman (voter): Open to cut rates as soon as July if inflation remains subdued; Haven't seen from impact from trade developments; Labor market is solid, but signs of softness are emerging - speech text.

- (US) Qatar has reportedly shut down airspace ahead of potential retaliation from Iran on US assets.

- (IR) Iran prepares to fire missiles at US bases in the coming minutes - Axios.

- (IR) Reportedly US Pres Trump doesn't want further US involvement in the region and the Iranian response was expected - press cites US official.

- (US) Fed's Goolsbee (voter): Critical to look at soft economic data at current moment of transition; Tariffs aren't unlike oil price shocks in that they drive worsening of both sides of dual mandate, they are stagflationary - moderated Q&A.

Europe

- (IR) Iran TV: Ceasefire begins following four waves of Iranian attacks on 'Israeli-occupied territories".

- (IR) Iran SNN: Tehran fired 'last round' of missiles toward Israel before ceasefire comes into effect; IDF issues another warning of incoming missiles from Iran [6th alert since Trump announced ceasefire].

- (EU) ECB's Villeroy: ECB may still cut rates despite oil price volatility - FT.

- (IR) Iranian Foreign Min Araghchi: Iran will Not continue strikes if Israel strikes end by 4am local time (01:00 GMT); Final decision on military ops will be made 'later' - post on X.

- (IR) Qatar Official: Qatar PM secured Iran's agreement to US ceasefire proposal with Israel in a call with Tehran - financial press.

- (IL) Israel Def Min Katz: Israel striking Iranian govt targets in Tehran; IDF Spokesman Defrin: IDF Targeting IRGC headquarters in Tehran.

- (IE) Ireland May PPI M/M: +0.8% v -1.4% prior; Y/Y: -1.8% v -3.6% prior.

- (UR) Germany govt official: NATO members have pledged €40B for Ukraine over next 12 months.

- FreightWaves: Spot rates for the largest crude oil tankers from the Persian Gulf to China have surged 50% in the past week on heightened Middle East tensions.

- (DE) Germany Chancellor Merz: EU approach to trade negotiations with US is with too complicated; We need agreement on 4 or 5 important industries such as autos or chemicals.

- (EU) ECB chief Lagarde: Risks to growth outlook remain tilted to the downside; Inflation is set to sustainably stabilize around the 2% target.

- (UK) BOE Gov Bailey: On quantitative easing and tightening: UK will keep the benefit of lower debt costs for considerably longer than other countries.

Levels as of 01:20 ET

- Nikkei 225 +1.2%, ASX 200 +0.9%, Hang Seng +2.0%; Shanghai Composite +1.0%; Kospi +3.1%.

- Equity S&P500 Futures +0.6%; Nasdaq100 +0.8%; DAX +1.4%; FTSE100 +0.4%.

- EUR 1.1572-1.1614; JPY 145.29-146.19; AUD 0.6450-0.6499; NZD 0.5950-6018.

- Gold -1.2% at $3,355/oz; Crude Oil -3.1% at $66.40/bbl; Copper +0.2% at $4.8950/lb.