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Macro Wrap

China's manufacturing activity picked up faster than expected in June buoyed by strong demand for high-tech exports amid global AI booms. The official purchasing managers’ index edged up to 50.3 in June, beating economists’ forecast of 50.1, returning to the expansionary territory above the 50-point threshold. The index stood at 50 in May. Output index growth accelerated (51.4 vs 51.2 in May), New Orders : 51.2 vs 49.9), input cost index eased but still came in higher (54.2 vs 60.5) business sentiment strengthened slightly (54.3 vs53.9), but China steel Industries PMI index remained in contraction at 47. Sentimentally positive for industrial metal mining sectors

Iraq is offering deep discount over the Benchmark Brent prices for their Basra crude oil grade to entice long-term buyers to lift Basra crude from its Gulf terminals. Basra medium crude discounts are $14–16/bbl and Basra heavy $16.80–18.80/bbl, with the deepest discounts for July 1–5 loadings and smaller discounts for July 6–10 and July 11–31 loadings. Iraq requires buyers to submit order volumes within one day of notification. the large discounts may attract buyers but whether passage through the Strait of Hormuz will be possible remains uncertain. Sentimentally positive for Indian OMCs.

US Iran heads to Doha but meeting is uncertain, A top Iranian official reaffirmed Tehran’s resolve to control the Strait of Hormuz, keeping geopolitical risks elevated before the talks. Tehran has also ruled out any negotiations at any level with the American side on Tuesday.

The DJIA, S&P500 and Nasdaq Composite Index rose 0.6%, 1.2% and 2.1% respectively overnight. The Dollar Index fell 0.3% to 101.11. EUR-USD rose 40 pips to 1.1420. The US 2Y Treasury yield rose around 1bp to 4.10% and the 10Y yield was little changed at 4.37. Brent crude rose 1.6% to USD73.15 as concerns over shipping disruptions in the Strait of Hormuz offset optimism surrounding renewed peace talks. Spot gold fell 1.8% to USD4,016 as investors rotated back into risk assets.

Data watch: we have the S&P Cotality CaseShiller house prices, Conference Board consumer confidence, and the job openings and labour turnover survey (JOLTS).