SK Hynix weighs on Tech, NQ -1%; Crude bid, but off best as US-Iran exchange fire - Newsquawk US Market Open

The US and Iran exchanged strikes over the weekend, with the US military targeting 140 Iranian military targets on Saturday and took further action on Sunday, while Iran attacked US bases across the Gulf and closed the Strait of Hormuz.
Iran's Foreign Ministry spokesperson said the US violated all clauses of the MoU in less than a month and stated that Iran will not execute commitments in the MoU as long as the US is not fulfilling its commitments.
Furthermore, the spokesperson said mediators are still continuing their efforts to mediate between Iran and the US in recent days and Iran is in contact with mediators. Energy benchmarks pulled back following the constructive rhetoric, Brent +2.3%.
US equity futures are off worst levels but the NQ is the clear underperformer, weighed down by the losses in SK Hynix (-15.4%).
DXY reverse earlier gains; JPY hit on GPIF chatter, NZD continues to benefit on tightening bets.
Looking ahead, highlights include OPEC MOMR (Jul), US Monthly Budget Statement (Jun), Coalition of the Willing Summit, Speakers including Fed’s Waller, BoE’s Pill, ECB's Schnabel & RBNZ’s Conway.

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IRAN CONFLICT

WEEKEND GEOPOLITICAL HEADLINES

US President Trump threatened that the US military would “completely decimate and destroy all areas” of Iran if its leaders attempted or carried out an assassination on him.
US forces said they struck 140 Iranian military targets on Saturday and were also reported to have carried out another round of strikes on Sunday, while Iran targeted at least five US allies across the Middle East in drone and missile assaults early on Sunday, as well as announced that the Strait of Hormuz would be closed until further notice. However, the Joint Maritime Information Centre said the path along the Omani coastline is still available for transit, while it was separately reported that a Chinese tanker transited through Hormuz via an Iran-designated route.
US official said around 20 commercial vessels transited through the Strait of Hormuz in coordination with the US military over the last 24 hours, in addition to several vessels without US coordination, according to Axios.
US military announced on Sunday evening that it began a new wave of strikes against Iran to continue degrading its ability to attack civilian mariners and commercial ships transiting the Strait of Hormuz, while Iranian TV reported explosions in Qeshm, Jask, Bandar Abbas and Sirik.
US Central Command denied a claim by Iran that three US service members were killed in Kuwait, while it stated that there have been no reports of US casualties in the region, with all personnel accounted for and safe. CENTCOM later commented that it completed a new wave of offensive strikes on Iran, hitting dozens of targets at multiple locations to degrade Iran's ability to continue attacking international shipping flowing through the Strait of Hormuz.
Kuwait’s military said three border posts were attacked and that a drilling platform owned by the Kuwait Oil Company was struck in a drone attack, while it was separately reported that US intelligence sources noted observations that Iran was preparing to carry out a massive attack on the UAE and Kuwait.
Iran said it caused heavy damage to Jordan’s Prince Hassan Airbase, as well as claimed it targeted the Al-Udeid Airbase in Qatar and a US Navy logistics base in Dukm, Oman. Furthermore, Iran also targeted Kuwait and the US base in Bahrain.
Iranian Supreme Leader Mojtaba Khamenei issued a written statement, vowing to avenge the death of his father and said that it was the demand of the nation.
Iran’s Foreign Ministry condemned US attacks on Iranian infrastructure, which it said were a violation of the ceasefire deal and the UN Charter, while it warned Gulf states over the use of territory for US attacks.
Iran's Deputy Foreign Minister Gharibabadi said no action against Iran should go unanswered and called for a pre-set response to any attempt against Iran, its military, Supreme Leader and officials.
Iranian lawmaker and member of the Iranian Parliament’s National Security and Foreign Policy Committee, Kashkavi, said Iran prefers to manage the Strait of Hormuz through cooperation with regional states, particularly Oman, and stated that the clear official position is that future management of the Strait will be arranged by Iran.
Iran denied social media reports that claimed the Bushehr nuclear power plant had been attacked, while its nuclear agency said all units continue to operate normally and that the plant is in a safe and stable condition.
Iraq’s PM is to visit Washington on Monday, while oil and gas deals are expected to be announced, although the Islamic Resistance in Iraq warned the government against US economic deals and demanded a US troop withdrawal.
Yemen’s Foreign Ministry reiterated that Yemen would continue its support of Iran in the face of ongoing US and Israeli aggression.
Israeli artillery conducted further shelling in southern Lebanon, according to Lebanon’s National News Agency.

EUROPEAN UPDATES

Explosions were heard around Iran’s Bandar Abbas and Qeshm Island on Monday afternoon, Mehr News reported, while there is also the possibility of clashes in the Persian Gulf and the Strait of Hormuz.
Reported fire at Kharg Island appears to be a result of routine flaring, according to Nour News.
Iran's Foreign Ministry spokesperson said the US violated all clauses of the MoU in less than a month and stated that Iran will not execute commitments in the MoU as long as the US is not fulfilling its commitments. He added that the MoU is in "crisis" phase. Muscat talks with Oman were solely focused on the Strait of Hormuz. On the recent strikes, none of the US bases in any country in the region have been removed from the target list and that the defensive strikes of Iran are solely against the bases, facilities and positions used by the US to attack Iran, including their logistical and support facilities. In terms of further talks, mediators are still continuing their efforts to mediate between Iran and the US in recent days and Iran is in contact with mediators.
Iran's IRGC said only way to open the Strait of Hormuz is to end US military interventions and respect the sovereignty of the countries bordering it.
There is no clear timetable for Israel’s withdrawal from the experimental areas in southern Lebanon amid a policy of consolidation and non-compliance with the framework agreement, Al Araby reported citing sources.

EUROPEAN TRADE

EQUITIES

European bourses (STOXX 600 -0.1%) start the week on the back foot but off worst levels, with price action being primarily driven by energy prices and the re-escalation of US-Iran tensions.
European sectors have improved at the open, now printing a mixed picture. Telecoms (+1.9%) top the sector pile, followed by Energy (+1.2%) and Media (+0.6%). To the downside are Travel & Leisure (-0.4%), Construction (-0.8%) and Tech (-0.7%).
US equity futures have come off worst levels, with the majority of indices flat outside of the NQ (-0.9%), given the slump in tech names overnight. SK Hynix's US-ADR is indicated lower by 10%, as it narrows the premium from its domestic listing, which reached as much as 25% overnight.
TSMC (2330 TT) - June revenue (TWD) 442.68bln (+67.9% Y/Y), Q2 1.27tln (exp. 1.26tln).
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FX

G10s are mixed against the Buck. Kiwi continues to benefit from rate repricing; JPY underperforms amid the familiar terms of trade/differentials factors.
USD fails to benefit from the lift in energy benchmarks, following constructive Iranian Foreign Ministry rhetoric this morning: “defensive strikes of the Islamic Republic of Iran are solely against the bases” and “Iran is in contact with mediators”. This pulled both the Buck and Energy off session highs. In addition to the focus on geopolitics, the Greenback positions into a number of key risk events this week including CPI and Warsh’s testimony. Price action since the emergence of London participants has been bearish, with DXY falling from an overnight 101.22 peak to a session low of 100.79.
JPY underperforms amid the factors mentioned above, alongside the view that Finance Minister Katayama’s GPIF remarks last week were another episode of attempted verbal intervention. Source reports this morning noted Japan has no immediate plan to change target asset allocations of its state pension funds but could work within existing allowable ranges to direct more investment to domestic assets. A report which pressured the currency and saw it rise to a 162.35 peak as the source report further reduces the credibility of Katayama’s remarks (see 08:09 BST analysis).
Kiwi is the best G10 performer as markets add to RBNZ tightening bets with two 25bp hikes now fully priced - a handful of bps more than the close on Friday. AUD/NZD trundled lower since the Sunday re-open, marking a session trough just below 1.20.

FIXED INCOME

Fixed income benchmarks initially fell at the open, as energy prices rose and a re-escalation of US-Iran tensions, but have come off worst levels at the start of European cash trade. Over the weekend, US forces struck 140 Iranian military targets on Saturday and took further action on Sunday, while Iran attacked US bases in the Gulf and announced that the Strait of Hormuz is closed.
USTs (-1 tick) rotate in a 108-26+ to 109-01 range, with yields falling a touch from 4.60%. On the Fed speaker front, Fed's Waller is slated to speak later today, while a flurry of speakers are expected throughout the week. In terms of market pricing, the October meeting is the first fully-priced hike by the Fed, with a further hike fully priced by Apr'27.
Bunds (-5 ticks) fell to a trough of 125.20 before coming off their lows, currently trading at session highs of 125.51. The data front from the EZ is quiet, with final inflation figures across the euro area slated for the week. On the supply front, the EU is to sell 3-, 7-, and 15-year Bonds. The sale should go fine, with the 3-year to receive decent demand.
Gilts (-18 ticks) underperform. There has been plenty of political news over the weekend: 1) Burnham is considering a big budget in November, 2) a review of the Help to Buy scheme is on the table from Burnham, and 3) Chancellor Reeves to focus on AI opportunities at her Mansion House speech. The November budget will be highly-watched, as usual, with allies and experts reportedly pushing Burnham, who is set to become PM on July 20th, to consider a land tax, greater public control of utilities and a more ambitious devolution strategy. Some of the underperformance can be explained by the strength in the crude complex, given the UK's high reliance on external energy.
The EU sells EUR 6.455 vs exp. EUR 7bln 2.375% 2029, 3.125% 2033 & 0.45% 2041 EU Bonds.

COMMODITIES

Crude benchmarks jumped c. 3.7% overnight (vs current +2.3%) amidst the latest bout of US-Iran strikes, and after the Iranian’s announce that the Strait of Hormuz is shut until further notice. Traffic through the Strait has slipped to multi-week lows, with only 6 vessels passing on Sunday (lowest in five-weeks).
As the European morning got underway, price action was fairly rangebound; however, some volatility was seen following comments by the Iranian Foreign Minister. He began the presser fairly hawkish, where he stated that Iran would not fulfil the MoU as long as the US doesn’t. Some modest upside was seen in benchmarks, but this was soon reversed after he stated that strikes against regional neighbours are “solely” against US bases. He also added that they are in contact with mediators.
It is interesting that the FM has chosen to say that Iran is "solely" acting against US bases, rather than also mentioning energy facilities. It indicates, at least for now, that the country is attempting to avoid a wider escalation. However, overnight, the Kuwait Oil Company said that its drilling platform was struck. Brent Aug’26 trades firmer by c. 2.3% and holds towards the lower end of a USD 77.72-79.80/bbl range.
Spot gold (-1.3%) extends lower this morning amidst the reemergence of inflationary woes, as energy prices grind higher this morning. Currently holding within a USD 4,044-4,075/oz range. Elsewhere, base metals are entirely in the red given the negative risk tone. 3M LME Copper (-0.3%) trades within a USD 13,364-13,480/t range.
OPEC MOMR is expected at 13:00BST/08:00EDT.
Kuwait has set its August OSP for extra-light crude to Asia at USD 5/bbl discount to the Oman/Dubai average.
ADNOC sets the August OSP for Murban crude at USD 80.01/bbl.
Iranian Customs has issued a directive to lift the ban on the export of chemical, polymer and petrochemical products.

TRADE/TARIFFS

EU is developing a “solidarity instrument” to support companies diversifying critical supplies away from China and cushion the impact of any Chinese retaliation in the event of a trade war.

NOTABLE EUROPEAN HEADLINES

BoE is said to be hit by internal divisions over shake-up, with critics stating that a failure to give clear signals is ‘confusing’ and risks wrongfooting the bond markets, according to FT.
UK’s Burnham reportedly explores holding an expanded autumn Budget, with the incoming PM considering combining the fiscal statement with a spending review to set out his political strategy, according to FT.
UK Chancellor Reeves is to focus on AI opportunities in her speech to the City on Tuesday, which is likely to be her last City of London event and final opportunity to defend her legacy.
Spain approved a USD 8bln housing plan that would triple government spending in public housing over four years.

GEOPOLITICS

RUSSIA-UKRAINE

Ukrainian military announced a drone attack that hit 15 Russian ships in the Sea of Azov, including 7 oil tankers. Additionally, the Ukraine Security Service said it struck a Russian oil depot in the Stavropol region, as well as storage tanks at Kavkaz port.
Ukraine’s military said it hit an oil refinery in Russia’s Samara region, while Russia also said that Ukraine struck a tanker in the Sea of Azov.
Ukrainian President Zelensky ousted Ukraine’s premier Svyrydenko as part of a shift in political strategy and is mulling naming Naftogaz CEO Koretskyi or former PM Shmyhai for the role.
EU failed to agree on the 21st round of Russian sanctions after negotiations on Sunday.
Slovakia’s President Pellegrini said Slovakia will not be involved in the new EUR 70bln aid package for Ukraine, nor will it supply weapons to Ukraine or fund further rearmament.

CRYPTO

Bitcoin sold off and slipped back below the USD 64k mark and briefly below the USD 63k handle amid the risk-off tone.

APAC TRADE

APAC stocks were pressured with the major regional indices all in the red following a fresh exchange of strikes between the US and Iran, which underpinned oil prices and yields, while Iran also declared the Strait of Hormuz would be closed until further notice.
ASX 200 was dragged lower by underperformance in the tech, utilities, mining, materials and resources sectors, but with the downside cushioned by resilience in the top-weighted financial industry.
Nikkei 225 pulled back from resistance around the 69,000 level with Japanese exporters pressured by higher oil prices and concerns of renewed shipping disruptions.
KOSPI was pressured by chip-related selling amid heavy losses in the likes of Samsung Electronics and SK Hynix, despite the latter's strong debut last Friday on the Nasdaq.
Hang Seng and Shanghai Comp conformed to the negative mood, albeit with the downside limited in Hong Kong as participants also digested preliminary H1 earnings updates and with China raising Southbound Bond Connect quota to USD 118bln.

NOTABLE ASIA-PAC HEADLINES

China raised the Southbound Bond Connect quota to USD 118bln, while the new quota represents a 60% increase for Hong Kong debt access.
China’s nationwide electricity load hit a record high of 1.518bln kilowatts on Friday.
China is cracking down on top ratings for corporate bonds with regulators pressuring agencies to limit AAA designations for high-interest borrowers, according to FT.
Chinese AI lab Zhipu’s founder said frontier AI should remain broadly accessible instead of being controlled by select individuals.
Japanese Chief Cabinet Secretary Kihara said GPIF to tweak its basic portfolio as needed.
Japan entered the reusable rocket race with its first experimental rocket taking off and returning in a limited test flight by JAXA.

NOTABLE APAC DATA RECAP

South Korea July 1st-10th Exports rose 53.9% Y/Y (prev. +85.9%), Imports rose 17.4% Y/Y (prev. +35.6%), Trade Balance is at a provisional surplus of USD 6.36bln.