The dominant macro force heading into Monday is the preliminary US-Iran peace agreement, struck on the sidelines of the G7 in France, which has sent crude oil futures down roughly 5% and unleashed a broad risk-on rally across global equities. This geopolitical de-escalation arrives at a pivotal moment for central banks: the ECB delivered its first rate hike since 2023 on 11 June — lifting its deposit rate to 2.25% — citing persistent inflation driven by Strait of Hormuz disruptions, while the Federal Reserve concludes its first FOMC meeting under new Chair Kevin Warsh this Wednesday and is expected to hold. The Bank of Japan, meanwhile, is widely tipped to raise its policy rate to 1% at today's meeting — a three-decade high — complicated by Governor Ueda's hospitalisation, with Deputy Governor Himino presiding and Uchida fronting the press conference. Taken together, the ECB hiking, the Fed on hold, and the BOJ tightening represent a significant global central bank divergence that will drive FX and capital flow narratives for weeks ahead.
For Asia-Pacific markets opening Monday, the confluence of oil-price relief, record equity closes in Tokyo and Seoul, and a sharply lower VIX (down 9% to 17.68) sets a constructive but fragile tone. The Nikkei surged 2.81% Friday and is pressing multi-decade highs, though analysts warn gains rest on a narrow set of names and elevated margin positioning, with trading halts triggered multiple times this week. The KOSPI's 4.63% Friday surge — driven by chip-sector momentum — and Hong Kong's 1.93% advance reflect genuine enthusiasm, but the BOJ rate decision today is the single most important near-term catalyst for AUD/JPY, regional bond markets, and ASX-listed resource and financial stocks. China's May activity data (retail sales, industrial output) also lands today, offering the first hard read on whether Beijing's stimulus is gaining traction.