The week's dominant macro story has been a sweeping hawkish pivot across the world's major central banks. The Federal Reserve, under new Chair Kevin Warsh, held rates at 3.50–3.75% but shocked markets with a near-unanimous 12-0 vote and dot plots showing nine of eighteen policymakers now pencilling in at least one rate hike by year-end — traders have fully priced in a hike, and the S&P 500 suffered its worst Fed day under a new chair since 1994 before staging a sharp Thursday recovery. The ECB raised rates by 25 basis points for the first time since 2023, the Bank of Japan hiked to 1.0%, and the RBA held at 4.35% with an explicit tightening bias, cementing a globally synchronised hawkish stance driven by Middle East energy inflation. A US-Iran MOU signed in France offered late-week relief, pulling crude prices lower and fuelling Thursday's equity rebound, though the deal remains conditional on 60 days of further negotiations.
For Asia-Pacific markets opening Friday, the net read is cautiously constructive after Thursday's Wall Street bounce — the S&P 500 +1.08%, Nasdaq +1.91%, and Russell 2000 +2.12% — but the underlying yield and policy backdrop remains challenging. The VIX collapsed 11% to 16.4, signalling a meaningful de-risking of near-term fear, yet the 2-year Treasury yield surged 15 basis points to 4.20%, keeping pressure on rate-sensitive sectors including REITs and growth stocks. For the ASX specifically, gold and base metals sold off sharply overnight — gold -3.08%, silver -7.07%, aluminium -7.27% — which is a direct headwind for the materials sector, while weaker crude will offer some relief to energy-intensive consumer and transport names. China's weak May data, with fixed asset investment at COVID-era lows, remains an unresolved drag on iron ore demand and ASX miners with direct China exposure.