Markets Briefing: US strikes Iran and revokes oil waiver as Hormuz risk reignites
Risk sentiment soured as a fresh flare-up in the Middle East reignited the oil-and-inflation threat just as a crowded technology trade unwound. US forces struck more than 80 targets in Iran, and Washington revoked the waiver that let Tehran sell oil abroad, following tanker attacks in the Strait of Hormuz (BBG) (CNBC). Crude jumped about 3%, and equities and bonds slipped.
The rotation was violent in Asia. South Korea's Kospi tumbled about 5% toward a technical bear market as investors fled crowded chipmakers after the overnight US semiconductor selloff (Investing). The flip side was Hong Kong, where Chinese tech rallied, and the Hang Seng jumped about 2.8% as global funds rotated into cheaper Chinese equities, helped by reports that local firms are building their own AI chips (BBG). Japan's Nikkei fell about 0.8%, and India's Nifty eased, while mainland China's CSI 300 edged up.
Central banks split along hawkish-dovish lines. The RBNZ raised its Official Cash Rate to 2.50%, as expected, and signalled further tightening is likely, with Governor Breman noting inflation may already have peaked (BBG) (RBNZ). Australia's RBA struck a similar note: assistant governor Sarah Hunter warned that repeated oil-style supply shocks have shifted the inflation trade-off higher and pledged the board will act as needed (BBG). In Japan, BOJ dissenter Toichiro Asada said he wants wage- and demand-driven inflation before backing more hikes, even as he flagged rapid cost pass-through (Reuters). The ECB's Fabio Panetta, by contrast, called the euro-area outlook fragile (Reuters), while the Fed's John Williams — speaking before the oil spike — said policy was well-positioned as energy prices fell (Yahoo).
In currencies, the dollar was broadly steady (BBG). The Australian dollar firmed on Hunter's hawkish message (BBG), while the yen languished near multi-decade lows (WSJ) and India's rupee slipped as the oil spike raised the country's import bill (CNBC). The Korean won held up despite the equity rout. The New Zealand dollar rallied after the RBNZ’s rate decision.
Government bonds sold off as the energy shock revived inflation risk. Japan's 10-year yield rose about 2.7 basis points to its highest since 1996 — fears over the country's debt load and spending plans deepened the long-end selloff (WSJ). Australia's 10-year climbed roughly 4.7 basis points after Hunter's remarks (BBG), and euro-area Bund futures slipped (CNBC). US Treasuries, by contrast, were steady (BBG).
Commodities rode the geopolitical premium. Oil led, with WTI up about 3% on the Hormuz disruption (CNBC), while gold rose about 0.5% and silver added about 1% on haven demand (BBG). Bitcoin fell about 0.9%, slipping with risk assets. Copper eased as industrial-metals sentiment stayed cautious.
The overnight data run was second-tier. Japan's bank lending held at 5.7% year-on-year, just under the 5.8% consensus and near the fastest pace since the pandemic (BBG), while the Economy Watchers current-conditions index rose to 44.0 from 43.6 but missed the 44.6 consensus (BBG). Japan's current-account surplus firmed to ¥3.968 trillion but undershot forecasts, and South Korea's surplus widened to $38.61 billion. Australian building approvals fell 1.1%, matching consensus.
Today, the June FOMC minutes land in the US evening at 20:00 CET, the first under Chair Warsh. The market will focus on how deep the hawkish 'family fight' runs beneath June's unanimous hold. Also, Sweden's June CPIF should confirm inflation well below target, which would be a relief for the Riksbank's doves. In addition, the ECB’s Nagel is due to speak. (Full Macro Roadmap)
Time Stamp: 07:15 CET