Morning Wrap: Tech Sell-off in Korea, Yen Hits 40-Year Low Ahead of NFP🚨

Asian trading was dominated by a violent rotation out of AI/tech stocks, hitting the KOSPI and Nikkei well before the European open.

Geopolitics

• Russia carried out a massive missile-and-drone attack overnight on Kyiv and other regions of Ukraine; Kyiv Mayor Vitali Klitschko reported 10 fatalities and 34 injured. Poland put fighter jets on alert, while Finland temporarily imposed (then lifted) an airspace closure over the Gulf of Finland in response to the Russian attack.

• US-Iran talks in Doha ended without a breakthrough, though Qatar cited "positive progress" on issues tied to the Islamabad MoU; the status of the Strait of Hormuz remains unclear, with the topic set to resume only next week. Trump nonetheless described the talks as "going well," which further calmed the oil market.

Economy and Macro Data

• Today (Thursday, exceptionally, due to Friday's July 4 holiday) at 14:30, the June US jobs report (NFP) will be released — consensus points to a slowdown to roughly 110-115K new jobs from 172K in May, with unemployment steady at 4.3%. Forecasts are widely dispersed (from 25K to 200K), and Goldman Sachs notes the World Cup may have added ~40K jobs in the hospitality sector.

• Markets expect a strong print to raise the odds of a September Fed rate hike (currently priced at roughly 66-80%), while a weak print would ease pressure for a hawkish stance. Fed Chair Kevin Warsh, speaking at the Sintra forum, said inflation risks have recently eased, but firmly reiterated commitment to the 2% inflation target.

• In Europe, the eurozone unemployment rate for May is expected at 6.3% (data due later today), while June HICP inflation fell more than expected to 2.8% y/y. ECB President Christine Lagarde stated that inflation and growth risks are now more balanced, which markets read as pushing back the timing of any further ECB rate hike.

Major Market Moves (Wall Street, Yesterday)

• US indices closed lower on Wednesday — the Dow Jones erased an earlier 423-point gain and finished just below flat, the S&P 500 fell 0.2%, and the Nasdaq Composite dropped 0.7% amid a selloff in semiconductor stocks. The VanEck Semiconductor ETF (SMH) lost 5.4%, with Micron and Sandisk each falling over 10% after reports that Meta plans to sell excess AI compute capacity, stoking fears of AI infrastructure overbuild.

• Futures this morning point to a mild rebound: Dow +0.1%, S&P 500 +0.14-0.2%, Nasdaq-100 +0.23-0.3%. US 10-year yields hold at 4.48%, while 2-year yields rose to 4.18% ahead of the NFP print.

Asian Markets

• The KOSPI bore the brunt of the session — falling as much as 5.36-6% at the open, triggering a five-minute "sidecar" trading halt on the Korean exchange; losses narrowed to roughly 2.7-3% by the close. Samsung Electronics and SK Hynix each lost more than 6-7%, and SK Square dropped over 10%, as the US semiconductor selloff spilled directly into Korean memory chipmakers.

• Japan's Nikkei 225 fell more moderately, around 1-1.2%, weighed by the same tech sentiment and rising yields, while the Topix stayed slightly positive. Hong Kong's Hang Seng broke from the regional trend, gaining 1.3-1.8% on strength in local tech and biopharma names, while China's CSI 300 lost over 2%.

• South Korea's June inflation rose to 3.2% y/y, the highest since December 2023, bolstering the case for a Bank of Korea rate hike at its July 16 meeting. Foreign investors pulled a record $137bn from Asian equities in H1 2026 — the fastest outflow pace in at least 16 years — as part of rebalancing following the massive AI rally in Korea and Taiwan.

Currencies

• The Japanese yen hit a 40-year low of 162.84 per dollar overnight, fueling speculation of intervention by Japan's Ministry of Finance; Reuters sources say Tokyo has shifted to "ambush tactics" against speculators, avoiding advance signaling. Friday's US holiday (July 4) is seen as a potential low-liquidity window for intervention.

• The dollar index remains stable (around 101.1-101.4), while EUR/USD holds near 1.138 after slight euro weakness yesterday following Lagarde's comments. The Aussie dollar slipped after Australia posted a large trade deficit instead of the expected surplus, with additional pressure from China's state-backed buyer restricting Fortescue iron ore inventories.

Commodities

• Oil continues its slide — WTI down about 1% to $67.8/barrel, Brent down about 1% to $70.9/barrel, marking Brent's worst quarter since 2020 (down nearly 40% for the quarter). The decline reflects progress in US-Iran talks and rising tanker traffic through Hormuz.

• Gold rebounded above $4,000/oz, supported by softer US jobs data and falling oil prices, reaching its highest level since June 23. An OMFIF survey of central banks suggests gold could trade in a $5,000-$6,000/oz range over the next 12 months.

Companies

• Apple is in talks to source memory chips from Chinese producers CXMT and YMTC, both on the Pentagon's blacklist (Section 1260H), with supply earmarked mainly for the Chinese market. Nikkei also reports Apple is planning five iPhone models across H2 2026-H1 2027, including more foldable models than previously expected.

• SoftBank has reopened talks with a bank consortium (Goldman Sachs, JPMorgan, Mizuho) for a $10bn loan backed by its OpenAI stake, now offering a corporate guarantee on repayment. Separately, the Financial Times reported OpenAI proposed giving the US government a 5% stake in the company (worth roughly $42.6bn at its $852bn valuation) to ease political pressure in Washington.

• Hong Kong-listed Chinese EV makers gained on strong June delivery figures — BYD rose about 9% after selling 403,472 vehicles (+5.46% y/y), while Xiaomi gained about 5% after its third straight month above 30,000 deliveries.

Crypto and Today's Session

• Bitcoin edged down to roughly $60,000-60,800, and Ethereum to around $1,606, tracking the broader risk-off mood. The key event today is the afternoon US NFP report — a strong print could strengthen the dollar and push yields higher, adding further pressure on tech stocks, while a weak print (particularly below ~65K) could open a window for Japanese currency intervention during Friday's thin holiday liquidity.

Volatility currently observed in the major markets. Source: xStation