US stocks sold off amid fears US will join the Israel-Iran war - Newsquawk Asia-Pac Market Open

"Western sources: We have indications that the U.S. will attack Iran soon", according to Kann News.
US President Trump is considering a range of options when it comes to Iran, including a possible US strike on the country, according to multiple officials cited by NBC.
US stocks were sold in another session dominated by Israel-Iran geopolitics and amid fears of the US joining Israel's offensive.
Oil was buoyed as it continued to profit off the escalating Middle East tensions with fears the US will join in.
Looking ahead, highlights include Japanese Import/Export Prices and Trade Balance, Supply from Australia.

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SNAPSHOT

US TRADE

US stocks were sold in another session dominated by Israel-Iran geopolitics and amid fears of the US joining Israel's offensive.
SPX -0.84% at 5,983, NDX -1.00% at 21,719, DJI -0.70% at 42,216, RUT -1.04% at 2,102
Click here for a detailed summary.

NOTABLE HEADLINES

India Aviation Regulator said DCGA raised concerns regarding recent maintenance-related issues reported by Air India; recent surveillance conducted on the Boeing (BA) 787 fleet did not reveal any major safety concerns. Air India's Boeing 787 aircraft and associated maintenance systems were found to be compliant with existing safety standards, according to Reuters.
US President Trump admin reportedly to consider crackdown on pharma ads, according to Bloomberg.
AMD (AMD) and Xbox (MSFT) announced strategic, multi-year partnership to co-engineer silicon across a portfolio of devices, including next-gen Xbox consoles.
BoC Minutes: Members expected the boost in export growth to dissipate quickly as tariffs and uncertainty contuined. There could be need for further reduction in interest rate if effects of tariffs and uncertainty continued to spread through economy and cost pressures on inflation were contained.

DATA

US Retail Sales MM (May) -0.9% vs. Exp. -0.7% (Prev. 0.1%, Rev. -0.1%)
US Retail Control (May) 0.4% vs. Exp. 0.3% (Prev. -0.2%, Rev. -0.1%)
US Retail Sales Ex-Autos MM (May) -0.3% vs. Exp. 0.1% (Prev. 0.1%)
US Retail Ex Gas/Autos (May) -0.1% (Prev. 0.2%, Rev. 0.1%)
US Import Prices MM (May) 0.0% vs. Exp. -0.2% (Prev. 0.1%)
US Export Prices MM (May) -0.9% vs. Exp. -0.2% (Prev. 0.1%)
US Manuf Output MM (May) 0.1% vs. Exp. 0.2% (Prev. -0.4%, Rev. -0.5%)
US Capacity Utilization SA (May) 77.4% vs. Exp. 77.7% (Prev. 77.7%)
US Industrial Production MM (May) -0.2% vs. Exp. 0.1% (Rev. 0.1%)
Atlanta Fed GDP Now (Q2 25): 3.5% (prev. 3.8%)
Canadian Securities Foreign C$ (Apr) -0.01B CA (Prev. -4.23B CA, Rev. -4.21B CA)
Canadian Securities Cdns C$ (Apr) 4.1B CA (Prev. 15.63B CA)

TRAD/TARIFFS

"The US trade team which includes White House NEC Director Kevin Hassett, Treasury Secretary Scott Bessent, & US Trade Representative Jamieson Greer stayed behind at the G7 to conduct trade talks with other countries" , via Fox's Lawrence.
Mexican President Sheinbaum said she had a very good phone conversation with US President Trump; they agreed to work together to reach an agreement on diverse topics that worry them.

FX

USD was broadly firmer against peers in a likely haven bid on Tuesday due to an increasing expectation of US involvement in the attack on Iran with Israel.
G10FX was entirely in the red, faltering in the flight to safety trade. As mentioned, the risk-averse sentiment benefited the dollar and USTs while JPY and CHF outperformed relatively.
JPY succumbed to USD strength with the hawkish reaction towards the BoJ meeting proving to be fleeting. The BoJ maintained its rate at 0.5% as expected in a unanimous vote.
EMs-ex COP were entirely in the red on the risk-off environment, with COP managing an unchanged performance with the currency supported by rising oil prices.

FIXED INCOME

T-notes caught a bid on fears of the US joining Israel in Iran strikes..
Germany sells EUR 0.988bln vs exp. EUR 1.0bln 2.10% 2029 and EUR 0.497bln vs exp. EUR 0.5bln 2.30% 2033 Green Bund. Sells EUR 0.988bln 2.10% 2029: b/c 3.22x (prev. 2.57x), average yield 2.02% (prev. 2.26%) & retention 1.2% (prev. 5.5%). Sells EUR 0.497bln 2.30% 2033: b/c 3.53x (prev. 2.25x), average yield 2.37% (prev. 2.40%) & retention 0.6% (prev. 9.2%).
UK sells GBP 4.5bln 4.375% 2030 Gilt: b/c 3.26x (prev. 3.23x), average yield 4.06% (prev. 3.977%) & tail 0.2bps (prev. 0.4bps).
US sells USD 23bln of 5yr TIPS; Stop through 1bps; Tail: -1.0bps (prev. 2.2bps). High Yield: 1.650% (prev. 1.702%, six-auction average 1.916%); WI 1.660%. B/C: 2.53x (prev. 2.28x, six-auction average 2.41x). Dealer: 6.55% (prev. 18.1%, six-auction average 10.6%). Direct: 18.82% (prev. 17.8%, six-auction average 18.8%). Indirect: 74.62% (prev. 64.2%, six-auction average 70.6%)

COMMODITIES

Oil was buoyed as it continued to profit off the escalating Middle East tensions with fears the US will join in.
Private inventory data (bbls): Crude -10.133mln (exp. -0.6mln), Distillate +0.32mln (exp. -0.1mln), Gasoline -0.2mln (exp. +0.2mln), Cushing -0.8mln

GEOPOLITICAL

MIDDLE EAST

"Western sources: We have indications that the U.S. will attack Iran soon", according to Kann News.
US President Trump is considering a range of options when it comes to Iran, including a possible US strike on the country, according to multiple officials cited by NBC.
The Pentagon is playing its role in providing options if diplomacy with Iran fails, via US official to Al Jazeera.
Politico's Jake Traylor citing a White House official, says that the “We” that President Trump is referring to here in the post on Truth after having complete control over Iran skies is in fact the United States, not Israel.
B-52 bombers are currently stationed on Diego Garcia island in the Indian ocean, according to informed sources at the Pentagon telling Al Jazeera. "US sources talk about the flight of strategic B-52 bombers towards the region", according to Asharq News.
US President Trump is seriously considering attacking Iran and is holding a crucial meeting with his advisers, according to Walla News/Axios citing Senior American Officials.
Iranian Chief of Staff said the operations carried out so far were a warning to deter, and punitive operations will be carried out soon, according to Sky News Arabia.
Pentagon is moving more fighter jets to the Middle East and is extending the deployment of air assets already in the Middle East, Fox News reports.
US military is preparing for the possibility that US President Trump decides to order the US Air Force to help refuel Israeli fighter jets as they carry out strikes over Iran, two sources familiar with the matter told CNN.
Trump's desire to handle the escalating conflict in the Middle East diplomatically is waning. Officials familiar w/ the ongoing discussions tell CNN Trump is growing increasingly warm to using US military assets to strike Iranian nuclear facilities. "Trump is not eager to make any deals with the Iranians unless they're far more forthcoming than they have been to date and are willing to make serious comprises regarding a potential nuclear deal, a White House official familiar with the ongoing discussions tells me". "The new, more hawkish posture represents a significant shift in Trump’s thinking, though the sources said Trump remains open to a diplomatic solution – if Iran makes significant concessions".
Before launching its attack on Iran last week, Israel provided the US with intelligence it deemed alarming: Tehran was conducting renewed research useful for a nuclear weapon, including on an explosive triggering system, via WSJ. "But U.S. officials briefed by the Israelis weren’t convinced that the information pointed to a decision by Tehran to build a bomb, according to a senior intelligence official, another U.S. official and two congressional aides familiar with the discussions. " "Trump’s view that Iran is near to getting a bomb is shared by some other administration officials. “We believe that Iran is as close to having a nuclear weapon as one can get. They have all the components necessary to put one together,” a senior administration official said."
IDF Spokesman said the Iranian regime still has great capabilities that allow it to harm them, Al Jazeera reports. They attacked the IRGC headquarters and killed Iran's Chief of Staff. "When we finish our mission, we will announce it and will not allow the existential threat against us to continue".
Senior White House Official tells Fox's Lawrence that the meeting with National Security Advisors in the Situation Room will start "very soon"; says "US strikes inside Iran on targets... are on the table". The Official telling him that US strikes inside Iran on targets, like the facility where Iran has its nuclear program, are on the table.
US President Trump reportedly backed down from sending senior officials to meet with the Iranians to try to reach a deal, according to US officials to CNN, being cited by Al Jazeera.
Israel Channel 12 journalists reports US could join war against Iran tonight, via Faytuks News citing a telegram post.
US President Trump said "We know exactly where the so-called “Supreme Leader” is hiding. He is an easy target, but is safe there - We are not going to take him out (kill!), at least not for now."
German Chancellor Merz said US weighing participation in Iran strikes, according to Politico; Merz said the decisions will probably be made in the near future.
US military moving fighter jets to Middle East and continuing deployments of warplanes to bolster defenses amid Israel-iran conflict, according to Reuters citing US officials.
Amaichai Stein posts on X "IDF assessment: Within about a week, the target bank in Iran will be depleted, and all planned strikes for the campaign will be completed. The IDF is concerned about the possibility that the war will extend beyond expectations".
QatarEnergy has instructed ships to remain outside the Gulf until the day before loading otherwise wait outside of Strait of Hormuz, according to Reuters citing sources. This applies to tankers for liquefied natural gas and petrochemicals, according to sources.
Israel Defence Minister Katz said they do not aim to overthrow the regime in Iran, but to remove the threat, according to Alhadath; Fordow facility is also an issue that will certainly be dealt with. There are more than 10 nuclear facilities in the vicinity of Tehran and are about to destroy these sites. Israel not in talks with Iran. Israel to attack significant targets in Tehran today.
Politico Reported: US President Trump will convene his closest military advisers in the Situation Room this morning, where he weighs "whether to join Israel’s bombardment of Iran". "Trump is taking advice from a range of sources — military, intelligence and civilian — as he weighs his options". “The White House is engaged in a process of deterrence,”, according to a source. The source also said “Trump has been consistent that Iran can’t have a nuclear bomb. Given the state of Iran’s air defences there are a lot of options … ”
Israeli officials told Axios that regime change isn't an official war aim, discussions about it are getting louder and more overt, via Axios. The White House supports Israel's stated war aims of eliminating Iran's nuclear and ballistic missile capabilities, but not a broader mission to reshape Iran through force.
US President Trump said he has "not reached out to Iran for 'Peace Talks' in any way, shape, or form".
Axios' Ravid posted on X, following Trump's latest Truth, "Trump continues to signal he might order a strike on Iran".
US President Trump said "We now have complete and total control of the skies over Iran.", via Truth Social.
Israeli PM Netanyahu is to hold a meeting with participation of military officials today, via Al Hadath.
Israeli Minister of Strategic Affairs said "we will remove Iran's capabilities to launch ballistic missiles, completing the mission in Iran will not take long", via Al Hadath; "We destroyed uranium enrichment facilities in Iran..We are close to completing the mission in Iran".
Iran plans to invite foreign diplomats to visit the country's nuclear facilities as part of its efforts to prevent them from being bombed, via an unidentified security source that told Saudi Al-Hadath TV.
UK PM Starmer said there's nothing US President Trump said that suggests US about to get involved in Israel-Iran conflict; has no doubt that Trump will stay out of the Israel-Iran conflict.
"[US] President Trump is meeting with his national security team about the Israel-Iran war in the White House Situation Room", via Axios.

RUSSIA-UKRAINE

EU Commission proposes ban on imports of Russian gas and LNG from Jan 1st 2026 (As expected).

EU/UK