Markets open week nervous at fresh Middle East escalation

General trend and developments - Iran said it had closed the Strait of Hormuz “indefinitely” on Saturday, other than its own “approved route” near its southern border on the Persian Gulf. The threat came as the IRGC struck a fourth ship of the past week - A UAE-owned, Cyprus-flagged container ship, transiting near the shoreline of Oman. US and Iran traded strikes throughout the weekend, continuing into Monday in Asia. (US Centcom late Sunday confirmed 140 targets hit in third round of strikes), as Pres Trump threatened to "destroy" Iran if attempts to assassinate him while Iran Supreme Leader vowed to ‘avenge’ his father. - Nevertheless, maritime intelligence tracked approximately 21 to 31 commercial vessel crossings through the Strait of Hormuz over the past 24 hours through Sunday night, Eastern time. -Attacks then escalated in the Asia session, with US CENTCOM announcing a 4th wave of attacks on Iran’s military while Iran said it had fired at a nd hit bases in Jordan, Bahrain and Kuwait. IRGC Navy also said it stopped two '“violating ships” that had shut down their systems. Still no confirmation of any damage caused by Iran at this time. -Markets progressively sold off during the session. Crude oil opened the week moderately higher +2-3%, moving up +4% to $74/bbl as the session continued while US equity FUTs opened down with Nasdaq FUTs rising to close the opening gap, then falling -1.5% at time of writing. -Kospi again the worst performer of Asia’s indices, -8% at its worst and below 7K and its lowest level since May 4th. Korean memory-maker SK Hynix lost -13% today to give back all of its gains priced in Won that it enjoyed in its successful US IPO on the Nasdaq on Friday. [ Note: Hynix was 7x oversubscribed and ending the day up approx. 13% higher than its $149 initial pricing. The third-biggest IPO of all time and the biggest IPO ever by a foreign company in the US soaked up over $26B in liquidity . At a $1.2T valuation by the end of the day, Hynix was larger than Micron and AMD by market cap]. -However, Samsung off by -6% today and Japan’s memory-maker Kioxia -11% indicated AI investor concerns not only contained to Hynix. -China on Saturday imposed temporary export restrictions on Helium due to the Middle East conflict and US-Iran tensions having severely squeezed supplies. Although China only produces about 1.6% of global helium, the ban prevents the re-export of foreign helium, securing it for local chipmaking, so China’s export ban will likely introduce further cost pressures. -Previously helium shortages had been largely attributed to Qatar and the Iran-war. However, more recently, large helium exporter Russia has been dealing with refining disruptions amid the Ukraine war. As such, Russia’s government introduced a diesel export ban last week [Jul 8th]. This is curious, as China’s helium restriction announcement came only 2 days later. Therefore, it seems plausible that the most recent helium supply issues might be driven by not only the ongoing Middle East situation, but also Russia. -Recall in recent days, there had been indications of improvements in helium supplies from the Middle East. Australian health care firm [Compumedics [(CMP.AU)] noted the helium-related supply and pricing disruption, which slowed MEG shipment and installation activity more than anticipated, has now been resolved [comments from Jul 6th]. - Incidentally back in March, during the early days of the Iran war, helium supplies had been one of the factors cited in the share price declines of chipmakers, including Hynix . On March 26th, the South Korean chipmaker noted it had ‘enough’ helium inventory. -Korea chip exports continue to power the South Korea economy, +193% y/y for first 10 days of July and accounting for 37.6% of total exports during the period. -Japanese yield curve initially softer again on top of the substantial falls on Friday after Fin Min Katayama floated the prospect of having Japanese pension funds increase their domestic investment allotment above the current 50% (likely possible in a change to the relevant investment Act, given Takaichi govt’s super-majority in parliament). However, JP yields tightened back up again today amid the war tensions with 10-years +5bps and 20-years +4bps [Note 20-year JGB auction tomorrow]. -NVIDIA’s Kyber server delays (designed to house its Rubin chips) and the impact on the co’s Chinese suppliers have remained in focus. Recent disclosures out of China possibly related to the matter include statements made by VGT [2476.HK] and Zhongji Innolight [300308.CN]. Meanwhile, shares of Kingboard Laminates [1888.HK] had declined last week on concerns related to speculated ‘manufacturing issues’ for the new NVIDIA AI server rack. -Chip price inflation is expected to remain a key theme for Q3, as BASIC Semiconductor has announced an up to 25% price hike. Samsung is speculated to continue to raise DRAM prices . Specifically, the co. is said to seek to raise DRAM prices by up to 20% in Q3 q/q; Samsung's DRAM ASP rose by >90% q/q during Q1. [financial press from Jul 5th]. -Fortunately, the eye of Typhoon Bavi stayed off the main island off Taiwan on Friday, although it did cause TSMC to delay the release of its June Revenues until today (Mon, July 13th). No reports of damage to TSMC manufacturing facilities at this time. -Japan joined the race to reusable rockets with SpaceX and China (which caught its first rocket from outer space just last week using an innovative cable-catching mechanism at sea), when its first experimental rocket safely took off and returned to ground in a short, limited test of just a few meters off the ground and a few meters of horizontal movement. - BOJ late Friday reportedly to keep policy steady at its July 31st meeting but raise its growth outlook and pledge to continue raising rates. OIS October chances of a 25bp steady at 67.0%. -Better news on the Services side of the New Zealand economy, to add to last week’s stand-out Manufacturing PMI , with Performance Services breaking back into positive territory. -In US politics Senator Lindsay Graham (R-SC) passed away suddenly over the weekend, having just returned from Ukraine. South Carolina law dictates that Gov McMaster will appoint a temporary replacement to fill the seat until the term officially ends on January 3, 2027. Although McMaster is a Republican himself, he is not legally required to choose a member of the same political party for the interim position. Graham’s death has triggered a special Primary election for his Republican Senate seat (ahead of the Nov mid-terms), scheduled for August 11th, 2026. -In related US Senate news ahead of the US mid-terms in November, injured US Senator Mitch McConnell said that he won't be able to return to the Senate floor to vote “quite yet”. - In Japanese politics, Japan PM Takaichi cabinet approval rating fell in a FNN poll to its lowest point of 2026 (61.6%). - Markets prepare for US-listed Q2 earnings season starting up in earnest this week; This week sees heavyweights such as Taiwan Semiconductor, banking names Goldman Sachs and JPMorgan Chase along with GE Aerospace and others. - Apple filed suit against OpenAI for alleged theft of trade secrets as the AI frontier lab hired over 400 former Apple employees. Several details of the case have already leaked out into the public sphere, with Apple said to be accusing OpenAI of having stolen confidential hardware secrets and supplier data for a competing device . Former Apple 24-year veteran product exec Tang Tan allegedly emailed himself proprietary documents - before he left Apple - and for more than a year after joining OpenAI said to have directed Apple staff (before they left Apple) to bring unreleased hardware to "show and tell" sessions during OpenAI job interviews. Tang was formerly VP of Product Design for the iPhone and Apple Watch. - US equity FUTs -1.2% to -0.5% during Asia trading. Looking ahead (Asian-weighted focus, using Asian time zone) -Tue 14th July: (Tue night, US Jun CPI ). -Wed 15th July: KR Jun Unemployment Rate, CN Q2 GDP & Jun “Data Dump” , IN Jun Trade Balance, EU May Industrial Production, (Wed night, US Jun PPI , CA Rate Decision). -Thu 16th July: KR Rate Decision , UK May GDP & Trade Balance, (Thu night, US Jun Advance Retail Sales ). -Fri 17th July: MY Q2 Advance GDP & Jun CPI, EU Jun Final CPI, (Fri night, US Jun Housing Starts, US Jun Industrial Production , US July Michigan Prelim Consumer Sentiment). Holidays in Asia this week -No holidays in Asia this week. Headlines/economic data Australia/New Zealand -(AU) ASX 200 opens -0.1% at 8,797-(NZ) New Zealand Jun Performance Services Index: 50.6 v 48.0 prior. -(NZ) New Zealand expects to issue at least NZ$5B May 2038 bonds , with bond transactions capped at NZ$7B. -(NZ) RBNZ Nowcast estimate of Q2 GDP Growth surges to +0.9%. China/Hong Kong -(CN) Shanghai Composite opens -0.8% at 3,966; (HK) Hang Seng opens 'roughly flat' at 24,157. -(CN) China imposes temporary export restriction on Helium - press [**TTN Note: China holds only ~1.6% share of world helium production] [weekend update]. -(CN) China reportedly instructs refiners to maintain or increase run rates - financial press [weekend update]. -(CN) 14 countries 'urge' China to accept 2016 Tribunal Decision on South China Sea. -(CN) China tightens oversight of capital market information – China Securities Journal. -(CN) Zhongji Innolight [300308.CN]: Notes rumor related to Q2 earnings is ‘groundless’ as the co. is very confident of its operations – Chinese press. -(CN) China K-shaped recovery increases case for stimulus – Chinese press. -(CN) China space / rocket companies said to be 'joining the race' to advance IPOs - Economic Information Daily (China). -(CN) Tier 1 US broker continues to prefer China A-shares over H-shares, cites factors including AI-related hardware technology firms; Notes China comprises >10% of global AI-related market cap vs. 18% of global AI-related Revs – US financial press. -(CN) On Fri, China State Council urged the faster development of digital infrastructure – Press [update]. -(HK) Follow Up: Hong Kong consults on new offshore yuan rate benchmark – HKEJ. -(HK) VGT [2476.HK] commented on rumored delay in NVIDIA's Rubin Server Architecture: co. has 'smooth and orderly' cooperation with core clients [update from Jul 10th]. -(CN) China PBOC sets the yuan mid-point at 6.7972 v 6.7989 prior (strongest since Feb 10th, 2023). -(CN) China PBOC Open Market Operation (OMO): Sells CNY224B in 7-day Reverse Repos; Net injects CNY217B v drains CNY43B prior. Japan -(JP) Nikkei 225 opens -0.2% at 68,411. -(JP) Japan enters reusable rocket race with first experimental rocket safely taking off and returning in limited first test flight by JAXA (update) [weekend update]. -(JP) Citigroup double upgrades Japan from underweight to overweight. -(JP) Japan PM Takaichi cabinet approval rating falls -3.7ppts to 61.6% - FNN Poll. -(JP) Japan Chief Cabinet Sec Kihara: [Confirms] 4 Japanese-related vessels remain in the Persian Gulf. -(JP) Japan summer holiday travel plans are being reduced due to inflation – Nikkei. Korea -(KR) Kospi opens -0.9% at 7,412. -(KR) SKHY Follow up: Shares fall -10% in Seoul following 'stellar' Nasdaq ADR debut on the 10th July, 2026. -(KR) South Korea July 1-10 Exports Y/Y: 53.9% v 85.9% prior; Imports Y/Y: 17.4% v 35.6% prior; Chip exports +193% y/y. -(KR) Follow up: South Korea FSS urges asset managers to 'step up' their oversight of ETFs - statement. -(KR) Korea Exchange triggers circuit breakers following Kospi index falling -8%, trading halted for 20 minutes. -(KR) Korea Exchange activates sidecar to halt Kospi program selling. -(KR) South Korea's benchmark Kospi index falls -7% below 7,000, lowest level since May 4th, 2026. Other Asia -(TW) TSM follow up: Typhoon Bavi skirted Taiwan's northern coast, steering the worst of catastrophic wind speed away from the Island and the country's semiconductor facilities. -(ID) Indonesia's Rupiah weakens to 18,110/USD amid a broad weakening in EM currencies, lowest since June 9th 2026. -(TW) 2330.TW Follow up: Taiwan Minister Wu: TSMC to add 2 advanced chip packaging plants in Chiayi Science Park, Taiwan (update). -(IN) India Central Bank (RBI) said to be likely selling USD through state-run banks around the 94.75 area – financial press. North America -(US) Pres. Trump: Senator Lindsey Graham, one of the greatest people and Senators I have ever known, is dead! He was a... - post on Truth Social. -(US) AAPL Reportedly files suit against OpenAI for alleged trade secret theft - press (update) [weekend update]. -(US) President Trump to sign an Executive Order at 4:30pm ET on Monday, 13th July, 2026. -(US) US Senator Mcconnell: I won't be able to return to the Senate floor to vote quite yet. -(US) FCC approves orbital space mirrors; the article mentions a start-up co. by the name of Reflect Orbital – Press [update]. Europe -(EU) UK, France, Germany issues a statement on Iranian attacks. -(NL) Netherlands May Trade Balance: €6.7B v €7.7B prior. -(FI) Finland May Current Account Balance: -€0.6B v -€2.2B prior. Middle East -(US) CENTCOM: US Military completes latest strikes (4th round) against Iran - post on X. -(IR) US CENTCOM: Forces began launching more strikes against Iran. Strikes at 5pm ET today to continue degrading their ability to attack civilian mariners and commercial ships freely transiting the Strait of Hormuz. -(US) President Trump: Strait of Hormuz is open - NBC Interview. -(IR) Iran Supreme Leader vows to "avenge" his father; Trump threatens to "destroy" Iran if attempts to assassinate him [weekend update]. -(IR) Iran closes Strait of Hormuz indefinitely; US and Iran trade strikes overnight [weekend update]. -(IR) IRGC: Attacked US military bases in Kuwait (following on from recent strikes on Jordan, Bahrain). -(IR) IRGC: Set fuel tanks, ammunition depots on fire at Prince Hassan air base in Jordan by firing missiles and drones; Retaliatory operation is continuing. -(IR) One killed, four wounded in US strike on Mahshahr water pumping station [time frame uncertain] - IRNA. -(IR) Bahrain's Interior Ministry: Sirens sounded in Bahrain. -(IR) US Official: Over the last 24 hours, 20 commercial vessels have transited through the Strait of Hormuz in coordination with the US military, in addition to several vessels without US coordination - Axios. -(IR) Jordanian Military: Intercepted, shot down four missiles that entered airspace from Iran - State News Agency. -(IL) Israel Jun Consumer Confidence: 84 v 89 prior [weekend update]. -(IL) Israel to hold parliamentary elections as Netanyahu seeks another term on the 27th October, 2026. Levels as of 01:20 ET Nikkei 225 -2.5% ; ASX 200 -0.1%; Hang Seng -0.2%; Shanghai Composite -2.3%; Kospi -8.6%. Equity S&P500 Futures -0.5%; Nasdaq