The dominant overnight macro driver was a sharp steepening of the US Treasury curve, with the 10-year yield rising 4bp to 4.72% and the 30-year adding 6bp to 5.31% — levels that price in persistent inflation and a materially higher-for-longer Fed trajectory, compressing the valuation premium across growth and rate-sensitive equities globally. The catalyst was a confluence of geopolitical energy risk — a merchant ship attack in the Strait of Hormuz and the expiry of the US-Iran 60-day memorandum lifting Brent crude to $91.06/bbl and WTI to $84.22/bbl — alongside a broad semiconductor sell-off on Wall Street that pushed NASDAQ down 1.33% and the VIX up 4.41% to 15.86, signalling a meaningful re-pricing of near-term equity risk.
For Asia-Pacific investors, the cross-asset transmission is concentrated in three channels. First, USD/JPY pushed higher to 159.65 (+0.19%), sustaining yen weakness despite intensifying intervention rhetoric from former top FX diplomat Mitsuhiro Furusawa and government backing for faster BOJ hikes — a dynamic that simultaneously supports Japanese export competitiveness but stokes imported inflation pressure. Second, the CNY held relatively firm at 6.7342 (USD/CNY down 0.08%), consistent with PBOC's managed band posture, but China's 4.3% Q2 GDP print underscores the demand fragility that limits Beijing's tolerance for currency volatility. Third, the commodity surge — with Brent above $91 and LNG JKM at $21.62/MMBtu (+1.87%) — creates a bifurcated sector picture across the region: Australian Materials (+1.76%) and Energy (+0.93%) caught a clear bid, while rate-sensitive ASX Financials (-1.76%) and Consumer Discretionary (-3.00%) bore the brunt of the yield-driven de-rating.