Oil surges as much as 12%, equities fall on Israeli strikes against Iranian missile and nuclear sites

General trend

- WTI Crude reopened in the Asia session down -0.5%, despite in the intervening hour an Israeli Official warning an attack on Iran could come as soon as Sunday, but the markets were jolted into action just after the Asian equity openings post 8pm ET when up to 200 Israeli jets bombed targets throughout Iran, including the capital Tehran, nuclear facilities, military installations as well as reports of oil facilities being hit. Reports that many top Iranian military commanders and atomic scientists being killed, with explosions at the Revolutionary Guard's HQ and the elimination of their top general, Salami and many other top military leaders.

- WTI Crude Oil surged as much as 12% into the mid-70s; Gold +1.3% to $3,450/oz in a flight to safety.

- US equity FUTs were hit hard down as much as 2%, however, Energy and Defense stocks in Asia saw broad gains, helping to keep the worst Asian performers, the Nikkei and the Kospi, down a modest -1.2% each.

- Japan 2,5,10,20,30,40 year JGB yield curve fell 4-6bps following the Israeli attacks.

- Japanese shippers warned about the Iran situation (Red Sea and beyond).

- Fears of retaliation from Iran came to fruition with Israel reporting up to 100 drones launched at Israel - no reports of damage yet, but airports in Israel, Iraq, Iran and Jordan are all closed.

- JPY/USD on a normal day might have got more of a bid after the Bank of Japan said to see inflation running stronger than expected, but the USD rose against the Yen during the session and despite the geopolitical tensions such as today usually favoring the Yen.

- In trade news, Thailand may become the second country after the UK to conclude a US trade deal before the 90-day deadline [July 9th]

- Less positive periphery trade-related news that China may delay Synopsys' approval of its $35B chip-merger with Ansys.

- RBAs Jacobs, Head of Domestic Markets mentioned an interesting point in a speech: “While Australia comprises only around 1 per cent of the outstanding sovereign bonds in advanced economies, it makes up more than 10 per cent of the AAA-rated sovereign bond universe”.

- New Zealand May Manufacturing PMI: 47.5 v 53.3 prior (1st month of contraction in 5 months).

- China PBOC sets Yuan reference rate: 7.1772 v 7.1803 prior (strongest fix since March).

- US equity FUTs -1.6% to -1.8% during Asian trading.

Looking ahead (Asian-weighted releases, using Asian time zone)

- Fri Jun 13th (Fri night US Jun Michigan Consumer Sentiment).

Holidays in Asia this week

- Mon Jun 9th Australia, Indonesia.

- Thu Jun 12th Philippines.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.1% at 8,559.

- RBA Jacobs, Head of Domestic Markets: New operational framework is designed to both foster liquid money markets and provide ample central bank reserves – speech.

- New Zealand May Manufacturing PMI: 47.5 v 53.3 prior (1st month of contraction in 5 months).

- RBNZ announces latest weekly Nowcast Q1 GDP growth of 0.63%.

China/Hong Kong

- Hang Seng opens -0.3% at 23,959; Shanghai Composite opens -0.2% at 3,397.

- China MOF sells 2-year, 10-year Special Sovereign Bonds.

- US Commerce Sec Lutnick: China tariff pause likely won't be extended; Not releasing engine parts yet; As magnets flow, we'll drop our countermeasures - Commentary on China deal.

- US Treasury Sec Bessent: We'll see if the China tariff pause ends in August; Believes there'll be more trade deals coming very quickly - 2nd day at Senate Hearing.

- China Commerce Ministry (MOFCOM): Will continue to step up examination, approval of export applications for rare earths.

- (EU) China and EU officials said to be considering Summit between July 24-25th - financial press.

- China Premier Li Qiang at meeting with ECB Pres Lagarde: China wants to expand cooperation with Europe – CCTV.

- Hong Kong Q1 PPI Y/Y: 4.8% v 4.1% prior.

- Hong Kong Q1 Industrial Production Y/Y: 0.7% v 1.0% prior.

- China PBOC sets Yuan reference rate: 7.1772 v 7.1803 prior (strongest fix since March).

- China PBOC Open Market Operation (OMO): Injects CNY203B in 7-day reverse repos; Net injects CNY68B v drains CN7B prior.

Japan

- Kospi opens +0.4% at 2,930.

- Mitsui OSK 104.JP Warns ships to be on alert for Iran situation - financial press.

- Nippon Yusen 9101.JP Warns vessels near Iran after Israeli strike.

- BOJ is said to see inflation running stronger than expected.

- Japan Apr Final Industrial Production M/M: -1.1% v -0.9% prelim; Y/Y: 0.5% v 0.7% prelim.

- Japan Apr Tertiary Industry Index M/M: 0.3% v 0.2%e.

- Japan sells ¥4.4T vs. ¥4.4T indicated in 3-Month Bills; Avg Yield: 0.4317% v 0.4529% prior; bid-to-cover: 4.05x v 3.11x prior.

- Japan 2,5,10,20,30,40 year JGB yield curve falls 4-6bps following Israeli attacks.

- Japan's ruling party LDP reportedly considering ¥40K/person handout - press.

- Japan's Upper House election will be held on July 20th - Japanese press.

- Bank of Japan (BOJ) announcement related to outright bond buying operations for 1~3 Years; 3~5 Years; 5~10 Years and 10~25 Years: Purchase amounts unchanged.

Korea

- Kospi opens +0.4% at 2,930.

- South Korea Pres Lee: Vows to accelerate working level trade talks with the US - Korean press.

- Follow Up: South Korea President Lee: Offers to help companies "minimize difficulties in the global market" - Comments while visiting the heads of the 5 Chaebol groups today - Press.

- Korea reportedly considers dividend income tax cut for retail investors - Asia press.

- North Korea's Leader Kim Jong Un: US provocation has become dangerous; North Korean battleships will soon roam the Pacific Ocean.

Other Asia

- (IN) Air India Boeing Dreamliner probe has put an early focus on engine thrust - WSJ.

- Thailand said to conclude US tariff talks before the 90-day deadline [July 9th] - press.

- Thailand Central Bank (BOT) Gov Sethaput: Future money is Not decentralised digital tokens - financial press.

- INDIA MAY CPI Y/Y: 2.8% V 3.0%E [overnight update].

- India and US said to harden their stances ahead of July 9th trade-deal deadline - press [overnight update].

North America

- - *(IR) IRAN GOVT: ISRAEL ATTACK COULD NOT HAVE BEEN DONE WITHOUT THE US; US WILL BE HELD RESPONSIBLE FOR THE ATTACK.

- (IL) Reportedly Israeli Official commented that 'There was full and complete coordination with Americans' on Iran strikes - Israel press.

- US Pres Trump: I was made aware of the attacks before they happened; Hopes that Iran will still come to the negotiating table; Watching for what retaliation may arise; CENTCOM is on high alert.

- - *(IL) US SEC STATE RUBIO: US IS NOT INVOLVED IN ISRAEL STRIKES AGAINST IRAN; ISRAEL TOOK A UNILATERAL ACTION.

- (IR) US Pres Trump will attend a National Security Council meeting tomorrow (Friday) at 11AM EST.

- US Pres Trump convening cabinet level meeting to discuss Israel strikes against Iran - CNN.

- (PE) Peru Central Bank (BCRP) leaves Reference Rate unchanged at 4.50%; as expected.

- JPMorgan analysts: Attack on Iran could drive oil prices to $120/bbl and US inflation to 5%.

- (US) Pres Trump: THE GREAT, BIG, BEAUTIFUL BILL WILL GROW THE ECONOMY LIKE IT HAS NEVER GROWN BEFORE.

- (US) MAY PPI FINAL DEMAND M/M: 0.1% V 0.2%E; Y/Y: 2.6% V 2.6%E; PPI (ex-food/energy) M/M: 0.1% v 0.3%e; Y/Y: 3.0% v 3.1%e; April revised higher.

- (US) INITIAL JOBLESS CLAIMS: 248K V 242KE (near 8-month highs); CONTINUING CLAIMS: 1.96M V 1.91ME (3.5-yrs high).

- (CA) Canada PM Carney: See progress in trade talks with US.

- (US) WEEKLY EIA NATURAL GAS INVENTORIES: +109 BCF VS. +108 BCF TO +110 BCF INDICATED RANGE.

- (US) US Pres Trump: Could go up with the auto tariffs; Might go up with auto tariff in the not too distant future; Oil prices have gone up a little bit; Doesn't like that they've come up; Reiterates desire for lower interest rates.

- (US) Q1 FINANCIAL ACCOUNT HOUSEHOLD CHANGE IN NET WORTH: -$0.16T V $0.164T PRIOR.

- (US) TREASURY $22B 30-YEAR BOND REOPENING DRAWS 4.844% V 4.813% PRIOR; BID TO COVER 2.43 V 2.37 PRIOR AND 2.42 OVER LAST 8 REOPENINGS.

- (AR) Argentina May National CPI M/M: 1.5% v 2.0%e; Y/Y: 43.5% v 44.6%e.

- NPS China said to delay approval of $35B chip-merger with Ansys – FT.

Europe

- *(IR) IDF CHIEF: IRANIAN REGIME WILL ATTEMPT TO ATTACK US IN RESPONSE.

- *(IR) REPORTEDLY IRAN WILL DECLARE WAR ON ISRAEL- PRESS.

- *(IR) IRAN'S ARMED FORCED SPOKESPERSON: US AS WELL AS ISREAL WILL RECEIVE A 'HARSH BLOW IN RESPONSE;' IRAN WILL HAVE A 'DECISIVE RESPONSE' TO THE ISRAELI ATTACK - IRAN NEWS.

- *(IR) IDF CHIEF: IRANIAN REGIME WILL ATTEMPT TO ATTACK US IN RESPONSE.

- *(IL) Israel PM Netanyahu: Strikes will last against Iran until "THREAT IS REMOVED;" Israel is seeking to remove the ballistic missile threat in Iran; Operation could take 'AS MANY DAYS AS IT TAKES'
(IL) ISRAEL BELIEVES IT HAS KILLED SOME IRANIAN GENERALS AS WELL AS ATOMIC SCIENTISTS.

- *(IR) FIRE AND SMOKE AT THE ISLAMIC REVOLUTIONARY GUARD'S (IRGC) COMMAND HEADQUARTERS SEEN IN TEHRAN - IRANIAN STATE TV.

- (IR) IDF CHIEF: IRANIAN REGIME WILL ATTEMPT TO ATTACK US IN RESPONSE.

- (IR) IRAN PLANNING 'DECISIVE RESPONSE' TO THE ISRAELI ATTACK - IRAN NEWS.

- *(IR) IDF CHIEF: IRANIAN REGIME WILL ATTEMPT TO ATTACK US IN RESPONSE.

- *(IR) FIRE AND SMOKE AT THE ISLAMIC REVOLUTIONARY GUARD'S (IRGC) COMMAND HEADQUARTERS SEEN IN TEHRAN - IRANIAN STATE TV.

- (IQ) Iraq has also closed its airspace following the conflict with Iran and Israelh.

- (IR) US Pres Trump: We remain committed to a diplomatic resolution to the Iran nuclear issue; Iran must first completely give up hopes of obtaining a nuclear weapon - Truth Social.

- (IR) Reportedly Israel's long threatened attack on Iran could materialize within days; Israeli Official has warned the attack could come as soon as Sunday unless Iran halts production of fissile material – Press.

- (IR) US special envoy Witkoff said to have warned Senate Republicans last week that an Iranian response to an Israeli bombing could be a mass casualty response - Axios.

- (IR) Iran Revolutionary Guard Commander Salami: Tehran would respond in 'more forceful and destructive way' against Israel than in past offensives - Iranian state media.

- ARM CEO: UK and Europe do not have energy to scale AI; Sides with Nvidia CEO Huang against export controls - conference comments.

- (PT) Portugal May Final CPI M/M: 0.3% v 0.4% prelim; Y/Y: 2.3% v 2.3% prelim.

- (IE) Ireland May CPI M/M: 0.0% v 0.4% prior; Y/Y: 1.7% v 2.2% prior.

- (EU) ECB's Muller (Estonia): Inflation seen around 2% in the near future - radio interview.

- (ES) ECB's De Guindos (Spain): Concerns have shifted from high inflation to slow growth.

- (RU) Reportedly most G-7 countries are prepared to lower Russian oil price cap, even without Pres Trump, if necessary - press.

- (UK) Trade Min Reynolds: Hopeful for US-UK deal on car tariffs by end of this week - comments to media.

Levels as of 01:20 ET

- Nikkei 225 -1.1%, ASX 200 -0.3%, Hang Seng -0.9%; Shanghai Composite -0.8%; Kospi -1.2%.

- Equity S&P500 Futures -1.6%; Nasdaq100 -1.8%; DAX -1.7%; FTSE100 -0.5%.

- EUR 1.1515-1.1614; JPY 142.80-143.77; AUD 0.6457-0.6532; NZD 0.6005.6071.

- Gold +1.3% at $3,446/oz; Crude Oil +8.2% at $73.67/bbl; Copper -0.9% at $4.7978/lb.