Asia open: Hang Seng underperforms on weak China’s retail sales, USD/JPY firmed above 159.75 after BoJ

• Markets embraced a strong risk-on rally after the US and Iran agreed on a framework to extend the ceasefire for 60 days and fully reopen the Strait of Hormuz, sharply reducing geopolitical and energy-related inflation risks.
• Technology stocks reclaimed market leadership, with the Nasdaq 100 surging 3% as investors rotated back into mega-cap growth names, supported by lower oil prices, Nvidia’s planned US$20 billion bond offering, and continued enthusiasm around AI infrastructure spending.
• Attention now shifts to central bank policy, particularly the inaugural FOMC meeting under Fed Chair Kevin Warsh, as markets assess whether lower energy prices are sufficient to temper expectations for a potential Fed rate hike later this year.
• Chart of the day: USD/JPY minor uptrend remains intact above 159.75 key support as it probes the 160.65 intervention risk level.

The price action of USD/JPY is holding at its 20-day moving average after its prior two retests on it on 12 June and 15 June, indicating a “cautious” minor bullish impulsive up move sequence as USD/JPY continues to probe its recent intervention level of 160.65 (see Fig. 1).

Watch the 159.75 key short-term pivotal support to maintain the near-term bullish tone on USD/JPY towards the key intermediate resistance at 160.65, and above it, the 161.14/120 resistance is next to watch.

However, a break and an hourly close below 159.75 invalidates the bullish tone, opening the door to a minor drop towards the next intermediate supports at 159.45 and 159.10/158.80 (also the 50-day moving average).

• The US and Iran agreed to a framework to extend the ceasefire for 60 days and fully reopen the Strait of Hormuz: Global supply chains and financial markets captured an extraordinary sigh of relief on Monday. Both sides had confirmed the establishment of a 60-day structural framework to completely halt conflict operations, fully reopen the Strait of Hormuz, and negotiate over Iran’s nuclear enrichment programme during the 60-day window. Formal signing of the agreement is expected on Friday, 19 June in Switzerland.
• Wall Street rallies and the Nasdaq 100 jumps 3% as the geopolitical premium dissipates: Risk appetite returned to the global equity landscape with extreme force. Driven by the breakthrough in the Persian Gulf, the S&P 500 surged nearly 2% to approach its best single-session performance since April, while the tech-heavy Nasdaq 100 jumped a massive 3.0% and the Dow Jones Industrial Average rocketed to a brand-new historic all-time high.
• Crude oil collapses below $85 as energy inflation fears evaporate: Global energy benchmarks capitulated as the threat of an extended military blockade dissolved. West Texas Intermediate (WTI) and Brent crude plunged steeply, with US crude settling at $81.17/bbl. The swift deflation of input energy costs has immediately recalculated near-term upstream inflation targets for global manufacturing sectors.
• NVIDIA set to raise $20 Billion in landmark corporate bond debut: Highlighting the massive, ongoing capital demands of global artificial intelligence infrastructure projects, Reuters reported that chip giant Nvidia is coming to the U.S. debt market to raise $20 billion. The offering, consisting of seven tranches maturing in 2056, represents the firm’s first major corporate bond sale in five years, arranged by Goldman Sachs, J.P. Morgan, and Morgan Stanley.

• Structural deflation of the Persian Gulf shock: The core structural mechanism steering multi-asset allocations on Monday was the aggressive extraction of the geopolitical stagflation premium. The formal signature of the US-Iran memorandum immediately altered intermediate inflation expectations by removing the immediate threat of a prolonged blockage of global trade choke points. As energy prices retreated beneath critical psychological supports, macro traders dramatically unwound bets on defensive commodities and scaled back expectations for emergency tightening metrics from developed-market central banks.
• The transition to the Warsh Fed era and Wednesday’s Dot Plot: Despite the massive relief rally catalysed by plunging oil prices, market participants are keeping focus pinned on Wednesday’s monumental FOMC meeting, marking newly appointed Federal Reserve Chair Kevin Warsh’s inaugural interest rate decision. Fed funds futures traders are still expecting around a 70% chance of a 25 bps rate hike to come in December, despite the cooling energy complex, while market participants widely expect the committee to keep the benchmark rate unchanged at 3.50% to 3.75% on Wednesday, 17 June. The market will look to see whether Chair Warsh removes the historical easing bias from the median dot plot, particularly given that headline metrics like May CPI reached a three-year high of 4.2%.
• Intraday breadth and the Tech leadership resurgence: Monday’s price action represented a tactical interruption to the “Great Rotation” of 2026. While recent weeks had seen institutional funds steadily exit overextended large-cap growth names to deploy into small-cap value and industrial cyclicals, the sheer velocity of the geopolitical relief bounce immediately drew capital right back into high-beta technology blocks. Powered by stabilised energy inputs and massive primary issuances such as NVIDIA’s $20 billion bond placement and SpaceX’s robust post-IPO secondary performance, mega-cap growth recaptured near-term liquidity dominance.

Equities: The S&P 500 climbed nearly 2.0% in its best single-session performance since April. The tech-heavy Nasdaq 100 led global benchmarks with a vertical 3.0% surge, while the blue-chip Dow Jones Industrial Average scaled new historic highs. In contrast, energy producers lagged significantly (-3.6% for the S&P Energy sector).

Fixed Income: Sovereign bonds caught a wave of structural re-buying as hawkish rate-hike fears subsided alongside energy metrics. The policy-sensitive US two-year Treasury yield dropped by 2 bps to settle at 4.07% on Monday, 15 June. In Europe, Germany’s 10-year Bund yield and the UK 10-year Gilt yield edged lower by 3 bps and 1 bps, reflecting broader macro decompression.

FX: The U.S. Dollar Index (DXY) traded on a softer tone but held its 20-day moving average, acting as a key intermediate support at 99.50. The British pound underperformed, trading almost unchanged at 1.3412 against the US dollar; earlier intraday gains were wiped out amid political risk in the UK (uncertainty surrounding PM Starmer’s fate).

The Japanese yen remained weak at 160.20 per US dollar as the BoJ hiked its policy rate by 25 bps, as expected, to 1%, a 31-year high, and offered a dovish element, saying it will pause its JGB taper from April 2027.

Commodities: WTI and Brent crude oil tumbled and broke below key medium-term supports of $85.50/bbl and $86.25/bbl. Lower energy prices reduced the stagflation risk narrative, allowing precious metals to extend their corrective rebound into a third consecutive session. Gold rallied 2.1% to close at $4,308/oz on Monday, 15 June, below its 20-day moving average ($4,405/oz).

• APAC tech and export hubs join global resurgence: Regional stock benchmarks across Japan, South Korea, and Taiwan experienced pronounced institutional capital inflows on Tuesday morning. Local export-oriented entities captured intense upside momentum, responding directly to the 3.0% vertical surge across the New York mega-cap technology space. Nikkei 225 (+0.6%), KOSPI (+2.1%), and TAIEX (+0.7%).
• China and Hong Kong underperform due to weak domestic consumption: China’s retail sales for May plummeted into negative territory (-0.6% y/y), the first time since December 2022, indicating very weak consumer sentiment and spending, as the Labour Day holiday in early May failed to offset the weakness. China A50 (-0.5%), and the Hang Seng Index (-1.3%).
• Regional Currencies Bounce from Low Floors: The South Korean Won and the Indonesian Rupiah showed clear signs of stabilisation. The rapid retreat in the global dollar index and the sharp deflation of crude oil import prices have materially alleviated structural balance-of-payments pressures across non-OPEC emerging economies.
• BOJ JGB Program under scrutiny: Japanese fixed-income markets traded calmly after the BoJ’s latest monetary policy decision to pause its JGB tapering programme from April 2027. The 10-year JGB yield continues to stabilise at 2.64% after spiking to a 30–year high of 2.75% in May 2026.

1. RBA Interest Rate Decision & Press Conference - 12.30 pm & 1.30 pm SGT Impact: AUD/USD, AUD crosses, ASX 200
2. Germany Zew Economic Sentiment (Jun) - 5:00 pm SGT (consensus: -6, May; -10.2) Impact: EUR/USD, EUR crosses, DAX
3. US Housing Starts (May) - 8:30 pm SGT (consensus: 1.43M, Apr: 1.465M) Impact: USD, US stock indices