A renewed sense of uncertainty returned to global markets after a Qatari LNG vessel was struck while leaving the Strait of Hormuz, highlighting the fragile state of the Middle East ceasefire. Energy prices moved higher in response, while investors reduced exposure to semiconductor and AI-related equities despite stronger Samsung earnings. Currency markets were mixed, with the US dollar gaining against most major peers, though the Japanese yen remained resilient. Hong Kong introduced a new gold clearing and settlement platform, while Japan’s auction of 30-year government bonds attracted the strongest demand seen in seven years.
Asia Pacific Markets
Equity markets across the Asia-Pacific region came under pressure, with Singapore standing out as the main positive exception. South Korea’s Kospi dropped sharply even after Samsung reported strong results, while Taiwan’s Taiex and Japan’s Nikkei 225 both lost more than 2%. The South Korean won advanced to a two-week high as SK Hynix prepared a large American depositary receipt sale and indicated that part of the proceeds would be brought back home. In Japan, labor earnings continued to rise, yet household spending remained weak, extending a trend that has persisted since late last year. Meanwhile, the offshore yuan softened as the dollar recovered recent losses.
European Markets
European developments were dominated by stronger-than-expected German industrial data and ongoing political attention in France. Germany reported a 0.9% increase in May industrial production, significantly exceeding forecasts and matching the strongest monthly gain since March 2025. Nevertheless, concerns remain that Europe’s largest economy may have stalled during the latest quarter. France reported another sizable trade deficit, while investors also focused on a court ruling that could determine whether Marine Le Pen is eligible to participate in next year’s presidential election. The euro traded slightly lower despite the favorable German figures, and regional bond yields generally moved higher.
American Markets
US investors faced a combination of rising Treasury yields, softer equity futures, and expectations of a wider trade deficit. The Treasury begins a week of large coupon auctions with a $58 billion sale of three-year notes, part of a broader $119 billion funding schedule. Market participants are also monitoring the New York Fed’s inflation survey after comments suggesting inflation expectations have eased. In commodities, oil prices climbed after the Hormuz shipping incident, helping August WTI approach $70 per barrel. North of the border, Canada releases trade and business activity figures ahead of closely watched employment data later this week, while Mexico reports automobile production and export statistics.