com Asia Market Update: Market impact of Middle East weekend kinetic activity blunted by Qatar talks tomorrow; ECB’s Sintra Forum starts, wi

***General Trend and Developments*** -Crude oil looked to be heading towards a higher open and US equity FUTs a lower open, until 20 minutes before the Monday reopenings, when Axios reported that the US and Iran would halt strikes and meet tomorrow in Doha, Qatar. -Oil ended up only opening modestly higher by US armed forces in the Middle East waited until the markets were closed in the weekend to retaliate against Iran for firing upon a Singaporean vessel last Thursday.

The US initially struck mainly strategic military targets such as depots on Friday night, mainly in southern Iran, in and around the Strait of Hormuz.

Iran then attacked Bahrain and Kuwait with missiles and drones on Saturday, leading to an even heavier bombardment of Iranian military facilities by the US on Saturday night.

Iran said at the time that the violation of the ceasefire will result in the complete halt of diplomatic processes. -Nikkei opened modestly higher but moved negative to be -1.0% during the session.

Kospi underperformed again, adding as much as -2.6% losses to the nearly -8% lost on Friday, before paring some losses late in session.

KR mega-tech weakness single-handedly outweighing gains in all other segments.

However, notably the smaller tech KOSDAQ up +7% (**Note: Hynix and Samsung not part of the Kosdaq).

Hang Seng outpeformed +1.7%, with Alibaba rebounding. -ECB’s annual policy forum in Sintra, Portugal, kicks off today through Wed, July 1st.

The theme this year is the somewhat contradictory title of "Shaping Europe's future: innovation, growth and stability".

One highlight likely to be the attendance of new US Fed Chair Warsh, scheduled to speak on the final day, Wed, July 1st at 09:30am ET.

Warsh will be part of a televised Q&A panel also featuring ECB's Pres Lagarde, BOE's Gov Bailey and BOC's Gov Macklem. -China’s MOFCOM added a further 20 Japanese firms to its export control list, citing aiming to stop Japan's "remilitarisation and nuclear ambitions". - Japan's Govt draft policy said to aim to more than double annual real economic growth to more than >1% (Japan's average real growth rate over the last five years was 0.4%). -Japan’s May retail sales also much stronger than expected, nearly +2% on the month when a -0.5% fall was expected with the y/y figure also a robust +5.0%.

Comes days after blowout department store sales in Japan. -Pres Trump late Friday threatened the EU and the UK with 100% tariffs on all good from any European country that imposes a Digital Service Tax on US firms, part of an ongoing battle between the US and Europe. -10, 20 and 30-year Japan JGB yields rose +5bps in curve steepening with the front end only slightly flat. -China PBOC debuted its new Overnight reverse repos today (alongside its key policy 7-day reverse repos), injecting CNY300B with the rate reportedly set at 1.25%, which would be lower than the 1.35% market expectations.

The use of the one-day tool aims to calm money markets through a typical half-year end funding crunch, rather than provide any clear policy signals.

This may be why the PBOC withheld the price information.

Fow now, PBOC overnight repos look to be a technical adjustment more than a significant policy change. -In AI news late Friday, the US govt allowed Anthropic’s Mythos 5 to be redeployed to some US organizations, although Fable 5 remains banned to the wider public for now, despite its brief appearance in some developer’s IDEs (developer environments) for a day or two last week. -China’s Zhipu / Z.AI continues to take token market share for its cheaper token consumption while being acceptably close to top model performance - and of course its Open Source nature makes it able to be cleaned and hosted locally around the world absent threat of backdoors to the CCP or Chinese competitors. -Amid growing clout and interest in Chinese biotechs, Hang Seng Biotech Index posted its largest intraday gains sice March, 2022. -As this update goes out for delivery, South Korea Pres Lee is in the process of formally announcing an expected KRW2,000T (~$1,29T) 10-year investment in chips, AI and infrastructure out of Samsung and SK Group / Hynix. - An interesting week coming up for US data prior to the July 5th holiday, with US Fed’s Warsh appearing on a high-powered panel (see above) at the ECB’s Sintra Forum. (Wed July 1st at 9:30am ET), Jun Manufacturing ISM also on Wed ET and the Nonfarm Payrolls Jun jobs report on Thursday ET. -US equity FUTs +0.6% during Asia trading *** Looking ahead (Asian-weighted focus, using Asian time zone)*** -Mon June 29th: EU Jun Consumer Confidence -Tue June 30th: KR May Industrial Production & Retail Sales, JP May Industrial Production & Unemployment Rate, NZ Jun ANZ Business Confidence, AU RBA Meeting Minutes, CN Jun PMIs, UK Q1 GDP, (Tue night, US Jun Consumer Confidence, US May JOLTs) -Wed July 1st: JP Q2 Tankan, KR Jun Prelim Trade Balance, EU & US Jun final S&P/HCOB Mnfg PMIs, CN June RatingDog Mnfg PMI, EU Jun Prelim CPI -Thu July 2nd: KR Jun CPI, AU May Trade Balance, JP 10-Year JGB Auction, EU May Unemployment Rate, (Thu night, US Jun Nonfarm Payrolls ) -Fri July 3rd: AU & JP Jun Final S&P PMIs, CN Jun RatingDog Svcs PMI, Global final Jun S&P/HCOB Services PMIs, (Note: “ Independence Day (Observed)” – U.S. markets closed, reduced liquidity ) *** Holidays in Asia this week*** -Wed July 1st: Hong Kong -Fri July 3rd: US Independence Day ***Headlines/Economic Data*** Australia/New Zealand -(AU) ASX 200 opens +0.4% at 8,795 -(AU) RBA Assist Gov Kent (Financial Markets): Board may have less tolerance for inflation below target - speech on Additional Monetary Policy Tools: Reflections and a New Framework -(AU) Australia is escalating enforcement of its under-16 social-media ban by proposing to double maximum penalties to A$99M and give the eSafety Commissioner stronger powers to demand compliance evidence from platforms and third-party age-assurance providers [weekend update] -(AU) Australia ACCC (market regulator); Partl