Oil starts flowing out of Hormuz, VOL amid reduced liquidity with CN, HK, TW and US closed

Asia Market Update: Oil starts flowing out of Hormuz; VOL amid reduced liquidity with CN, HK, TW and US closed Fri; Overnight CBs inline; USTR sets sights on EU Pharma.

General trend and developments

–-US VP Vance gave up on heading to Switzerland for a formal signing with Iran, as both Pres Trump and Pres Pezeshkian of Iran have already signed the MOU. Both sides today gave cautionary warnings to the other about breaking the terms of the MoU but for now, US and Iran appear to be respecting its terms – although differences in interpretation of the finally released 14 point plan no doubt will arise at some point.

-Nikkei reported 6 oil tankers passed through the Strait of Hormuz over the past 24 hours amid further signs the Strait is opening. However, Japanese shipper Kawasaki Kisen warned that due to crew and safety reason that normalization would “take some time”.

-Even the seemingly unstoppable US equity FUTs began to join other risk assets to the downside as the Asia session continued, with Nasdaq FUTs down -1% heading into the US holiday. Gold, Silver, Bitcoin and currencies all down on a resurgent US dollar (DXY now 100.86).

– China, Hong Kong, Taiwan, US on holiday left Asia with lower-than-normal liquidity today. Kospi and Nikkei initially saw fresh record highs, Kospi +3% along with Hynix and Samsung enjoying yet further fresh record highs. Volatility hit the Kospi as it lost all its gains to go underwater by mid-session. Nikkei also came off its best levels as the session wore on. All major Asian indices ended up losing ground.

-Japan’s National CPI for May continue to stay stubbornly below the BOJ’s 2% target for a fifth month, with core-core (ex-fresh food and energy) slowest pace since Sept 2022.

-However, Dep Gov Himino in his delivery of the BOJ semi-annual report to the National Diet says he does believe CPI will pick up during the summer on the back of higher wages and corporate price hikes. Himino cautioned that delaying hikes on price risks could cause long-term damage.

-Meanwhile the habitually out-of-date Minutes for the BOJ two decisions ago showed some calling for faster rate hikes, as evidenced by the 6-3 split vote at the time, with Takata, Tamura and Nakagawa all calliing for a hike in April (finally delivered at the June meeting earlier this week).
Yen fell to 161.81 overnight, close to its 40-year lows at levels last seen in July 2024, just before the flash rise in the Yen to 140 during the initial stages of the BOJ hiking cycle.

-All central banks acted in line with expectations overnight; UK’s BOE and Switzerland’s SNB both holding for their fourth straight pause. Norway’s Norges also paused while in Asia the Philippines BSP hiked 25bps amid sharply higher inflation forecasts; Indonesia BI also delivered another 25bps on top of last week’s emergency 25bps hike prioritizing rupiah stabilization, while Taiwan CBC held at 2.00% (eighth pause) despite two dissents for a hike. All the CB’s that paused did so with hawkish language remaining around the need to contain inflation.

-EM currencies under pressure as Korea Won weakened back towards 2009 GFC levels and Indonesia Central bank’s rate hike overnight not helping the Rupiah as it weakened -0.8%, testing toward recent all-time lows

–Aussie dollar the only G10 currency still holding above last week’s lows against the US dollar, perhaps Australian interest rates being the highest in the G10 assisting the Aussie.

– USTR continued to expand its renewed menu of recent trade actions, announcing initiation of Section 301 investigation on Germany for underpayments on pharmaceutical products.

– China announced that Australia beef imports had now hit 100% of its quota and from tomorrow will face an additional 55% tariff.

-Hottest South Korea PPI in nearly four years, at 8.5% primarily driven by the ongoing Middle East crisis causing a spike in global energy and raw material costs.

-British pound and likely Gilts during the UK session may come under pressure following Manchester Mayor Andy Burnham wining the much-watched Makerfield by-election, putting him in line to challenge Keir Starmer for the PM role. A close eye will be kept on any potential changes to the Chancellor role currently held by Reeves, a point of concern for UK gilt markets already under pressure from the UK’s dismal fiscal situation.

-Intel got its expected kick in US trading overnight, up more than +10%, following Pres Trump confirming that Apple has agreed for Intel to design and build its chips in the US.

**Note: Friday 19th sees US markets closed, reduced liquidity.

-US equity FUTs -0.7% to -1.0% during Asia trading.

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

-Fri Jun 19th: (Note: Juneteenth” – US markets closed, reduced liquidity.

Holidays in Asia this week

-Tue Jun 16th: Indonesia.

-Wed Jun 17th: Malaysia.

-Fri Jun 19th: China, Hong Kong, Taiwan, US.

Headlines/economic data

Australia/New Zealand

-(AU) ASX 200 opens -0.9% at 8,830.

-(NZ) New Zealand May Trade Balance (NZD): 0.8B v 1.6B prior.

-(NZ) New Zealand BNZ May Job Ads M/M: +0.3%.

China/Hong Kong

-(CN) Shanghai Composite closed for the ‘Dragon Boat Festival’ holiday; (HK) Hang Seng closed for the ‘Dragon Boat Festival’ holiday.

-(CN) China’s Commerce Minister Wang: China willing to work with Canada to expand cooperation list – meeting with Canada’s Industry Minister.

-(CN) Follow up: China says Australia beef imports hit 100% of it’s quota on June 18th, 2026; To impose an additional 55% tariff, effective June 20th, 2026.

Japan

-(JP) Nikkei 225 opens +0.7% at 71,551 (fresh record-high).

-(JP) Japan May National CPI Y/Y: 1.5% v 1.5%e; CPI (Ex-fresh food) Y/Y: 1.4% v 1.4%e.

-(JP) Bank of Japan (BOJ) Dep Gov Himino: Japan’s economy is recovering moderately – Semi-annual testimony on monetary policy to the National Diet.

-(JP) BOJ Apr Minutes (2 decisions ago): To keep raising rate in response to economy, prices.

-(JP) Japan Fin Min Katayama: Won’t rely on debt to fund food sales tax cut; We are prepared to take decisive action on speculative moves on Forex.

Korea

-(KR) Kospi opens +2.5% at 9,289 (fresh record-high).

-(KR) 000660.KR Shares of SK Hynix and Samsung Electronics valued at fresh record-high’s.

-(KR) South Korea Fin Min Koo: External uncertainties easing after US-Iran MOU – Meeting.

-(KR) South Korea May PPI Y/Y: 8.5% v 7.2% prior.

-(KR) South Korea PM Kim to visit China June 22-24th – Korea press.

Other Asia

-(ID) Indonesia’s Rupiah falls a further -0.8% to 17,830/USD in early trading.

-(PH) Philippines Central Bank (BSP) raises overnight borrowing rate by 25bps to 4.75%; As expected [EU market close].

-(ID) Indonesia Central Bank (BI) raises BI rate by 25bps to 5.75%; As expected [EU market close].

-(TW) Taiwan Central Bank (CBC) leaves benchmark interest rate unchanged at 2.00%; As expected [EU market close].

-(MY) Malaysia May Trade Balance (MYR): 40.4B v 22.8Be.

-(MY) Malaysia May CPI Y/Y: 2.0% v 2.1%e (moves back within target range).

North America

-(US) USTR announces initiation of section 301 investigation on Germany for underpayments on pharmaceutical products.

-(US) Dept of War Dep Sec Feinberg reportedly told US lawmakers that ~$80B is required to cover US-Iran war and other items – WSJ [citing people familiar on matter].

-(US) President Trump: There are “no limits” to my power after the Iran war – Axios interview via CNN.

-(US) ANTHROPIC.IPO Follow up: Reportedly early users of Anthropic’s ‘Mythos’ retain access after US order.

-(US) Sen Warren (D-MA): Requests US Treasury to address China’s “currency manipulation’; co-signed by Sen Rick Scott (R-FL).

-(US) USTR: US & Mexican teams advanced talks on rules of Origin for certain industrial goods and economic security.

-(US) May Leading Index: 0.1% v 0.1%e [US market close].

-(US) Weekly EIA Natural Gas Inventories: +73 BCF vs. +75-77 BCF indicated range [US market close].

-(CA) Canada Jun CFIB Business Barometer: 49.6 v 46.3 prior [US market close].

-(BR) Brazil to auction up to 60,000 FX swaps on June 19th, 2026.

-(BR) Brazil Fin Min Durigan: See room for further SELIC rate cuts [US market close].

-(VE) US State Department: Pleased that Venezuela Assembly leader met opposition official Dinorah Figuera – Statement.

-(AR) Argentina’s government awards tender to key grain-transport waterway to Jan De Nul and Servimagnus.

Europe

-(UK) Bank of England (BOE) leaves bank rate unchanged at 3.75%; As expected; Reiterates ‘ready to act’ on inflation [EU market close].

-(UK) Bank of England (BOE) Jun Minutes: Voted 7-2 on policy (members Pill and Greene sought 25bps hike) [EU market close].

-(UK) Labour’s Andy Burnham wins UK’s Makerfield By-Election with 24,927 votes [~54.8%].

-(UR) Ukraine Central Bank (NBU) leaves Key Rate unchanged at 15.00%; as expected [EU market close].

-(UR) Ukraine’s Zelenskiy: We want to end this war before winter through diplomacy and through pressure on Russia.

-(RU) EU confirm extending Russian sanctions for 12 months.

-(EU) EU to remove barriers to banks’ cross-border capital flows – FT.

-(UK) TTN Research Alert: Andy Burnham expected to call leadership challenge after Makerfield By-Election win (polls close 17:00 ET / 21:00 GMT).

-(UK) Jun GfK Consumer Confidence: -23 v -23e.

-(UK) BOE allots £134.4B in 7-day short-term repo operation (STR) vs. £126.5B prior (record high).

-(UK) Daily Baltic Dry Bulk Index +0.2% at 2,659 points.

-(CZ) Czech Central bank (CNB) Gov Michl: Today’s rate hike will help tame core inflation, which remains elevated – post rate decision press conference [EU market close].

-(PT) Portugal May PPI M/M: 1.0% v 2.4% prior; Y/Y: 5.1% v 3.8% prior [EU market close].

Middle East

-(IR) Follow up: US VP Vance no longer travelling to Switzerland tonight – US press pool in Europe.

-(IR) Iran President Pezeshkian publishes text of MOU with US [EU market close].

-(KW) Kuwait begins ramping oil output; To top 2M b/d in one week – comments from Kuwait Petroleum CEO Nawaf in interview [EU market close].

-(IL) Israel Jun 12-month CPI Forecast: 1.8% v 2.1% prior [EU market close].

-(IR) At least six oil tankers transited Strait of Hormuz in the first day since signing of US-Iran MOU – Nikkei.

-(IR) Follow up: Iran Parliament Speaker Ghalibaf: Any breach of the agreement or excessive demands will be met with a strong response.

-(IR) Iran shipping traffic said to be back to normal at southern ports – Iranian press [EU market close].

-(IQ) Iraq oil Min: Return to normal ops will be gradual until previous output levels are reached; Oil fields are ready to resume production ops.

-(AE) Abu Dhabi tells buyers to lift crude oil from inside Strait of Hormuz – Adnoc Notice.

Levels as of 01:20 ET

Nikkei 225 -0.3%; ASX 200 -1.1%; Hang Seng closed; Shanghai Composite closed; Kospi -1.5%;.

Equity S&P500 Futures -0.7%; Nasdaq100 -1.0%; DAX -0.5%; FTSE100 -0.2%.

EUR 1.1469-1.1420; JPY 161.46-160.99; AUD 0.7023-0.6990; NZD 0.5799-0.5724.

Gold -1.8% at $4,130/oz; BTC -2.0% at $62,592; Crude Oil +0.9% at $77.32/bbl; Copper -1.3% at $6.2923/lbs.