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Potential Geopolitical Shocks Likely to Generate New Operational Challenges for Financial System, RBA Says

The impact of potential geopolitical shocks is likely to differ from more traditional macro-financial stress in several ways, including by generating new operational challenges for the financial system, the Reserve Bank of Australia (RBA) noted in its bulletin released Tuesday.The RBA defined geopolitical risk as the potential for adverse impacts on the financial system from international tensions, including trade restrictions, sanctions, grey-zone activities and conflicts.The geopolitical risk framework identified four key stress transmission channels: financial conditions, the real economy, safety and security, and international policy responses, per the report. Credit risk, liquidity risk, operational risk, security and capacity risk, and political risk are expected to be the most relevant in a geopolitical scenario, it added.Such a shock could lead to the potential amplification of financial risks, new operational challenges for the financial system, and coordination challenges in crisis management, given the potential for multiple financial and operational risks to be triggered at once, RBA said.Periods of heightened geopolitical risk may not be fully reflected in asset prices or volatility measures until risks crystallize, the bank said. Material geopolitical risks can build while remaining only partially priced, increasing the potential for sudden and nonlinear adjustments when conditions deteriorate, it added.

ASX 200

China's Trade Surplus Widens to $105 Billion in May

China's trade surplus expanded to $105.4 billion in May from $84.8 billion in April, according to data from the General Administration of Customs released Tuesday.The reading was higher than the consensus forecast of $88.7 billion tracked by Investing.com.Exports rose 19.4% year over year to $376.8 billion, hitting the consensus forecast for a 15% growth and exceeding April's 14.1% expansion.Imports increased 27.4% to $271.3 billion, faster than the 25.3% jump in April. The consensus forecast was for a 25% rise.

Shanghai Composite^SZSE

China's Car Sales Slump 22.3% in May

China's car sales dropped for the eighth straight month in May, posting a 22.3% year-on-year decline to 1.5 million vehicles, Reuters reported Monday, citing data from the China Passenger Car Association.Sales between January and May fell 19.7% to 7.2 million units, according to the media outlet.The decline reflected the impact of the oil price hikes brought by the Middle East conflict, according to the CPCA's secretary general, Cui Dongshu, the report said.The association said sales for the entire year were forecasted to dip 11%, wider than the predicted 1% decline, according to Reuters.

Shanghai Composite^SZSE

Japanese Investors Sell JPY2.72 Trillion of Foreign Stocks in May

Japanese investors sold 2.72 trillion yen worth of foreign stocks net in May, according to data from the Ministry of Finance on Monday.The selloff marked the fastest pace in about five years amid the Middle East conflict and questions over a tech-driven market rally, Reuters reported separately.Investors appeared to be swapping riskier assets for foreign debt, with purchases reaching a net 2.9 trillion yen during the month, the most since May 2025, according to the report.

Nikkei 225

Total Value of Residential Dwellings in Australia Rises in March Quarter

The total value of residential dwellings in Australia rose 2.5% in the March quarter, settling at AU$12.773 trillion, figures from the Australian Bureau of Statistics showed Tuesday.The mean price of residential buildings rose AU$22,300 to AU$1.1 million in the quarter.Dwelling value growth slowed this quarter after a strong increase in late 2025, though Australia's housing stock remains 11.9% higher year-on-year, driven by continued rises in residential property prices, said Mish Tan, ABS head of finance statistics.Victoria was the only state or territory to record a decline in the mean price of residential dwellings this quarter, falling 0.3%, while Western Australia rose 7.2% and Queensland increased 4.6%, recording the strongest gains, per the report.

ASX 200

Australia's Consumer Sentiment Falls in June as Cost Pressures Weigh on Confidence

Australia's consumer confidence fell further into pessimistic territory in June as cost-of-living pressures, weakening household finances, and softer housing expectations continued to weigh on sentiment, according to a survey by Westpac and the Melbourne Institute published Tuesday.The Westpac-Melbourne Institute Consumer Sentiment Index fell 2.9% to 80.6 in June from 83 in May.Consumer sentiment has fallen back into near-record pessimism in June, with cost-of-living pressures still dominant and emerging concerns over tax changes and housing expectations dragging confidence lower, said Matthew Hassan, head of Australian macro-forecasting at Westpac.Family finances deteriorated sharply in June as confidence in both current conditions and the year ahead fell, reversing most of May's gains amid renewed cost-of-living pressure.Consumer sentiment toward the economy over the next 12 months improved slightly in June but remains weak overall, with the modest 0.3% gross domestic product growth in the March quarter easing some earlier fears of a sharper downturn.Purchase sentiment remains weak as the "time to buy a major item" index rose 0.9% to 86.4, but remains far below its long-run average of 123, signaling continued consumer restraint.The Westpac-Melbourne Institute Unemployment Expectations Index was broadly unchanged in May, down 0.1% to 139.8, remaining above its long-run average of 129 and signaling continued consumer caution about job prospects.Homebuyer sentiment partially recovered after last month's sharp drop, with the "time to buy a dwelling" index rising nearly 13% to 81.1 from a very weak May reading of 72, though it remains well below the long-run average of 119.June saw a sharp drop in house price expectations, with the Westpac-Melbourne Institute index falling 14.9% to 128.2 and dropping below the long-run average of 130 for the first time in nearly three years.Australian households are increasingly viewing bank deposits and debt reduction as the "wisest" places for savings, while confidence in housing investment has fallen to record lows.The Reserve Bank is expected to pause interest rate rises at its next meeting to assess the impact of recent energy price shocks and aggressive monetary tightening, but persistent underlying inflation is likely to keep the door open to further hikes later in the year.

ASX 200

Market Chatter: Indian Central Bank's Net-short Dollar Book Rose Sharply Prior to Support Measure

India's central bank increased its commitments to deliver dollars in May as part of efforts to support the local currency, Bloomberg reported Monday.The Reserve Bank of India's net-short dollar book, a measure of forward-market commitments, rose sharply to about $110 billion to $115 billion last month from $95.3 billion in April, the report said, citing people familiar with the developments.The RBI's intervention intensified after the rupee weakened to a record low on May 20, though the currency finally received some breathing room after the government scrapped taxes on overseas investment in the country's bonds.The move, announced recently, spurred the largest inflow in almost a year to India's index-eligible bonds, the report said.(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

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Market Chatter: Japanese Firms' Time Deposits Rise 22% as of March

The balance of time deposits by corporations in Japan rose 22% year over year to 76.95 trillion yen as of March, Nikkei Asia reported Tuesday, citing data from the Bank of Japan.The figure is now close to a 26-year high, the report said.The balance of term deposits in the country remained mostly steady in the 40 trillion yen to 50 trillion yen range for about two decades before 2023, but began rising sharply amid increasing interest rates, the report said.(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

Nikkei 225

New Zealand Card Spending Falls 0.3% in May, Says Westpac

New Zealand spending on a per-person basis on Westpac-issued debit and credit cards fell 0.3% in May, adjusted for seasonal swings, with spending effectively tracking sideways since the start of the year, according to a Tuesday Westpac report.The bank said fuel spending declined as petrol prices eased, although prices remain well above pre-conflict levels, while grocery spending also eased modestly as buyers shifted toward essentials over discretionary items amid cost-of-living pressures.May saw a bounce in travel-related spending, but it remains well below levels seen in early 2026, while spending in restaurants and on takeaways picked up again, aided by the easing in fuel prices, the report added.Despite the pickup in hospitality spending, many operators reported tough trading conditions, and spending on other entertainment activities continued to ease, it added.

New Zealand National Home Values in May Just 0.2% Lower Year-over-Year, QV House Price Index Says

New Zealand national average home values in May reached NZ$912,190, 0.3% higher in the three months to the end of May and 0.2% less than the same period in the previous year, according to the QV House Price Index released on Tuesday.This was 14.2% below the market's previous peak in early 2022.The figures pointed to a housing market that remained broadly stable but which was increasingly patchy around the edges, QV spokesperson Simon Petersen said. "There's a steady supply of houses for sale and enough buyers to meet the market, but not nearly enough competition to drive prices upward in any major way."However, relative affordability and a strong local economy are helping to support demand in parts of the South Island, especially in and around Invercargill and Southland in general, Petersen added.The Auckland region's average home value was unchanged at NZ$1.2 million in May, 22.3% below its previous peak, and 2.8% lower than the same time in the previous year.The average home value in Christchurch increased by 1.6% to NZ$808,601 in the three months to May.Meanwhile, Wellington City's average home value increased by 0.2% in the quarter to NZ$910,286, which is 27.6% below its previous peak.

New Zealand Business Financial Data Industries Report Sales of NZ$200 Billion in March Quarter

New Zealand business financial data industries reported sales of NZ$200 billion in the March quarter, up 5.3%, or NZ$10 billion, from the March 2025 quarter, according to figures released by Stats NZ on Tuesday.Purchases were NZ$140 billion, up 4.8%, or NZ$6.4 billion, while salaries and wages were NZ$32 billion, up NZ$892 million.Meanwhile, operating profit was NZ$29 billion, up 11%, or NZ$2.8 billion, compared with the same period last year.When adjusted for seasonal effects, the total value of wholesale trade sales rose 8.8% in the March quarter to NZ$42.29 billion, while total manufacturing sales were up 3.9% to NZ$35.61 billion, per the report.

New Zealand Total Actual Filled Jobs Inch Down in the March Quarter

Total actual filled jobs in New Zealand inched down to 2.26 million in the March quarter from 2.27 million in the December 2025 quarter, according to data published by Stats NZ on Tuesday.Total seasonally adjusted filled jobs were up 0.1% over the same period, the report said.The largest changes in seasonally adjusted filled jobs in the March quarter compared with the December 2025 quarter were in transport, postal and warehousing, up 0.9% or 834 jobs, and education and training, up 0.3% or 728 jobs, the data showed.At a regional level, Canterbury recorded the largest increase in seasonally adjusted filled jobs, up 0.5% or 1,507 jobs, followed by Waikato, up 0.5% or 1,042 jobs, the data added.Total gross earnings for the year ended March rose 2.7% to NZ$4.8 billion, with the largest annual increases in health care and social assistance, up 4.7% or NZ$1.1 billion, education and training, up 6.6% or NZ$943 million, and public administration and safety, up 3.7% or NZ$608 million, it added.

South Korea's Q1 GDP Rises 3.8% Year Over Year

South Korea's GDP grew 3.8% year over year in the first quarter, according to preliminary data released by the Bank of Korea on Tuesday.The pace of growth was faster than the 1.6% expansion recorded in the previous quarter, exceeding the consensus forecast for a 3.6% growth, according to Investing.com.On a quarter-over-quarter basis, the economy expanded 1.8%, rebounding from the 0.1% contraction in the previous quarter. It also topped the consensus forecast of 1.7%.

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US Equity Markets Mixed After Trump Manages to Keep Ceasefire Intact

US equity indexes were mixed on Monday after technology stocks rose and President Donald Trump managed to keep the Iran ceasefire intact, while negotiations to reach a peace deal with Tehran remain halted.* Consumer expectations for one-year US inflation growth was 3.5% in May, down from 3.6% in April, according to a survey released by the New York Federal Reserve Bank on Monday.* Israel and Iran must immediately stop "shooting," Trump said in a Truth Social post. Israel accepted the US request to halt strikes on Iran but will continue attacks on southern Lebanon, sources told CNN. Iran has suspended its operations on Israel, but warned it would resume if strikes in southern Lebanon continue, the news report said Monday.* July West Texas Intermediate crude oil rose $0.65 to settle at $91.19 per barrel, while August Brent crude, the global benchmark, was last seen up $1.05 at $94.15.* Alphabet's (GOOG, GOOGL) Google and Nvidia (NVDA) turned to Intel (INTC) as a backup manufacturer for their most advanced processors as Taiwan Semiconductor Manufacturing (TSM) struggles to meet overwhelming demand, The Information reported Monday. Intel shares were up roughly 11%, the top gainer on the S&P 500.* Ciena (CIEN) shares were down 5%, the steepest decline on the S&P 500, after the company said it planned a private offering of $2 billion of convertible senior notes due 2031.

US Existing Homes Sales Pace Expected to Accelerate Further in May

The National Association of Realtors' measure of US existing-home sales is expected to accelerate to a 4.06 million annual rate in May, based on a survey compiled by Bloomberg, after rising by 0.2% to a 4.02 million rate in April.Existing-home sales were at a 4.04 million rate in May 2025, so the year-over-year change would be slightly positive.The data are scheduled to be released at 10:00 am ET Tuesday.The pending home sales index, also produced by the NAR, was up 1.4% in April and was 3.2% above its reading a year ago. That measure is taken at contract signing and is meant to foreshadow movements in existing homes closings a month or two out.Recent mortgage application data from the Mortgage Bankers Association indicated that mortgage rates rose in May before falling at the end of the month.

May US Median Inflation Expectations Slow for Short Term, According to NY Fed Survey

Consumer expectations for one-year US inflation growth decreased to a 3.5% gain in May from a 3.6% gain in the previous month, according to a survey released by the New York Federal Reserve Bank on Monday.The median inflation expectations remained unchanged at 3.1% gain for the three-year period and at a 3.0% gain for five years ahead.The median inflation uncertainty increased to 3.6% from 3.5% in the one-year horizon and increased to 3.5% from 3.2% for the three-year outlook.Median home price change expectations rose to 3.5% from 3.0% while home price uncertainty declined to a 3.7% increase from a 4.0% increase in the previous month.The median one-year expectations commodity prices growth rose for food and rent and declined for gas, medical care, college education and gold.Earnings growth expectations remained unchanged in May at 2.7%. Expectation for losing a job increased while those for finding a job decreased. Expectations for higher unemployment one year from now decreased.

May US Median Five-Year Inflation Expectations Unchanged at 3.0% Increase, NY Fed Says

May US Median Three-Year Inflation Expectations Unchanged at 3.1% Increase, NY Fed Says