Key Takeaways
- U.S. forces expanded air strikes against Iranian military targets for a third consecutive night, hitting over 140 targets to degrade capabilities in the Strait of Hormuz.
- Oil prices surged over 3.5% as Tehran announced the closure of the Strait of Hormuz and launched retaliatory drone and missile attacks against Bahrain, Qatar, and the UAE.
- Japanese Government Bonds (JGBs) rallied following signals that the Government Pension Investment Fund (GPIF) may repatriate capital to domestic assets, strengthening the Yen.
- South Korea's trade surplus hit $6.4 billion for the first ten days of July, driven by a massive 193% YoY surge in semiconductor exports.
- Brookfield Asset Management (BAM) is in exclusive talks to acquire a stake in Manhattan’s Hudson Square Properties, valuing the tech-heavy portfolio at $3.5 billion.
Middle East Conflict Escalates
The United States has intensified its military campaign against Iran, with U.S. Central Command (CENTCOM) launching a fresh wave of strikes starting Sunday afternoon. The operation, which lasted over three hours, targeted Iranian Revolutionary Guard Corps (IRGC) capabilities in the Strait of Hormuz, including the Al-Amidiya Airport in Khuzestan. President Donald Trump stated the strikes were necessary to hold Tehran accountable for attacks on commercial shipping, specifically a Cyprus-flagged container ship.
In retaliation, Iran has broadened its attacks to include Gulf states, launching missiles and drones at Bahrain, Qatar, and the United Arab Emirates. Tehran officially declared the Strait of Hormuz closed until further notice, a move that has sent Brent crude climbing toward $79 per barrel. While Gold prices initially declined as investors weighed the potential for further Federal Reserve rate hikes to combat energy-driven inflation, the market remains on high alert for a broader regional war.
Japan and South Korea Economic Shifts
Japanese Government Bonds (JGBs) saw increased demand as Finance Minister Satsuki Katayama suggested a strategic pivot for the $1.8 trillion GPIF. The proposal encourages Japan’s massive pension funds to shift allocations away from foreign securities toward domestic financial assets. This "capital repatriation" is viewed by analysts as a critical move to support the Yen and fund domestic initiatives in AI and semiconductors.
Meanwhile, South Korea reported a robust 17.4% YoY increase in imports for the July 1–10 period, though this was overshadowed by a record-breaking export performance. Semiconductor exports reached $11.2 billion, a nearly 200% increase, underscoring the global demand for AI-related hardware. The country's trade balance remains firmly in surplus at $6.4 billion, despite rising costs for energy imports like crude oil and gas.
Corporate Developments and Climate Crisis
In the retail sector, Japanese footwear giant ABC-Mart (2670) is accelerating its expansion into Southeast Asia. Under new President Kiichiro Hattori, the company aims to increase its overseas sales share from 30% to 50%, targeting young consumers in emerging markets to offset a maturing domestic landscape. In real estate, Brookfield Asset Management (BAM) is betting on the resilience of the New York tech sector by seeking a 10% stake in the Hudson Square Complex, a hub for major AI firms like Anthropic.
Separately, Europe continues to battle a catastrophic climate crisis. Wildfires are currently raging near Paris as temperatures approach 40°C (104°F). In the United Kingdom, the ongoing heatwave has been linked to an estimated 2,700 deaths, prompting emergency services to remain on high alert. The extreme weather is expected to further strain regional power grids and impact agricultural productivity across the continent.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.