Global markets closed out the first half of 2026 under the weight of three intersecting forces: a fragile Middle East ceasefire, a hawkish pivot by major central banks, and growing questions about the sustainability of AI capital expenditure. The US-Iran memorandum of understanding signed on 18 June temporarily eased oil prices — Brent settling near $71.99 and WTI at $69.23 — but President Trump's accusation that Iran violated the truce by firing on Strait of Hormuz cargo ships injected fresh uncertainty into the energy complex, leaving risk sentiment cautious heading into the new week. The ECB delivered its first rate hike since 2023 on 11 June, lifting its deposit facility rate to 2.25%, while the Fed has entirely shelved rate-cut expectations with US CPI running at 4.2%, and the Bank of Japan raised its benchmark rate to 1% — a coordinated global tightening cycle that is pressuring growth assets and extending the pain in long-duration bonds.
For Asia-Pacific markets opening this Monday, the dominant overnight signal is one of differentiated weakness: the Nikkei 225 plunged 4.15% to 69,360 and the KOSPI cratered 5.81% to 8,411 as the BOJ's hawkish stance and a strengthening yen — USD/JPY at 161.79 — rattled export-sensitive equities, while the SSE fell 2.26% and the Hang Seng dropped 1.76% on persistent FDI outflows and PBoC inaction. The ASX 200 managed a slim 0.18% gain on Friday and the ASX VIX eased to 11.72, suggesting the local market has found some relative shelter, though the materials sector faces headwinds from lithium names and the looming China trade data due at 03:00 AEST will set the tone for bulk commodities and resource stocks early in the session.