Trump tries again.
The US has proposed 10% tariffs on 60 nations alongside a forced-labour Section 301 investigation. Australia's Q1 GDP slowed to 0.3% as data centre imports weighed on growth. China's Services PMI for May 2026 came in at 54.4, beating expectations of 52.3 and the prior reading of 52.6, marking the fastest expansion in three months. Australia's Q1 2026 GDP registered 0.3% quarter-on-quarter and 2.5% year-on-year. The PBOC set the USD/CNY mid-point at 6.8184, compared to an estimate of 6.7673. SpaceX is targeting a $75 billion IPO at $135 a share as its Nasdaq roadshow approaches. Japan's services PMI flatlined in May as war costs hit a record high. Japan approved a $19 billion supplementary budget to offset inflation linked to the Middle East conflict. USD/JPY hit 160, prompting Japan's finance minister to step in with verbal intervention. US forces and partners intercepted Iranian missiles and drones across the Gulf. Air attacks on Saudi Arabia and Dubai were subsequently reported. Australia's services PMI slipped to 48.7 as the Middle East war weighed on demand. New Zealand's Q1 terms of trade fell while April building permits rose. China's SAIC Motor announced plans to build its first EU electric vehicle factory in Europe, located in Spain. Kuwait reported it was responding to hostile missile and drone threats. The Reserve Bank of India reportedly sold approximately $12 billion in gold to defend the rupee amid an oil shock. Canada's LeBlanc said trade talks with the US have resumed, with more meetings ahead. The US military fired a Hellfire missile at a tanker bound for Iran's Kharg Island. An oil inventory draw came in larger than expected, and oil climbed to a one-week high as Iran-US deal signals remained mixed.
Summary
Iran fired at least 10 ballistic missiles at US military bases in Kuwait, targeting Ali Al Salem Air Base, and followed with strikes on Bahrain, Saudi Arabia and Dubai. Air raid sirens were activated at US bases in Saudi Arabia, and all flights in Kuwait, Bahrain and the UAE were temporarily suspended. CENTCOM had earlier disabled an unladen tanker heading to Iran's Kharg Island with a Hellfire missile strike to the engine room, and multiple explosions were also reported off the southern coast of Qeshm Island. Oil prices rose sharply on the escalation, with an immediate risk premium spike in Brent and WTI, while the US dollar added modest gains through the session.
Japan's Finance Minister Katayama warned that Tokyo is prepared to respond appropriately on forex as USD/JPY touched 160 — the recognized intervention threshold — and the dollar paused at that level as traders grew cautious. Japan's cabinet approved a ¥3.1 trillion supplementary budget funded entirely by deficit bonds to subsidize fuel and utility costs, with a ¥2.5 trillion reserve targeting gasoline prices first. Australia's Q1 GDP came in at 0.3% quarter-on-quarter and 2.5% year-on-year, both below consensus, as a surge in data centre equipment imports and war-driven fuel costs offset strong domestic demand; the Australian dollar barely moved. The US proposed tariffs of at least 10% on imports from around 60 countries under a Section 301 forced-labour investigation, with a higher 12.5% rate for China, India, Japan and others. SpaceX set a $135 per share target price for its IPO, aiming to sell 555.6 million shares to raise $75 billion, which would make it the largest IPO in history.
Tuesday was one of those sessions where the news flow refused to slow down, and the common thread running through almost all of it was the same: the US-Iran conflict, now more than three months old, is still getting worse before it gets better.
The day's most dramatic development was Iran's missile salvo, with the IRGC firing at least ten ballistic missiles at US military bases in Kuwait, targeting Ali Al Salem Air Base in what Tehran framed as retaliation for a US strike on an oil tanker and on Qeshm Island. The attacks did not stop there. Bahrain, Saudi Arabia and Dubai all reported strikes, air raid sirens activated at US bases in Saudi Arabia, and aviation authorities suspended all flights across Kuwait, Bahrain and the UAE for a period as the Gulf's airspace became, temporarily, a war zone.
CENTCOM had earlier disabled an unladen tanker attempting to run the blockade toward Kharg Island, striking its engine room with a Hellfire missile, and multiple explosions had been reported off Qeshm Island before Iran's retaliatory volley was launched. Oil responded immediately, with Brent and WTI both spiking on the escalation. The pattern of exchanges is hardening into something that looks less like a ceasefire under strain and more like a formalized tit-for-tat, uncomfortably reminiscent of the Houthi cycle that eventually saw Washington pull back from its objectives in pursuit of de-escalation. For now, the risk premium is going one way.
In currency markets, the yen commanded attention as USD/JPY touched 160, the level at which Japan spent heavily on intervention in 2024. Finance Minister Katayama deployed the standard pre-intervention formulation, saying Tokyo stood ready to respond appropriately as needed, and the dollar paused at that level as traders thought better of pressing further. The warning landed alongside Japan's cabinet approving a ¥3.1 trillion supplementary budget, funded entirely through deficit bonds, to subsidize fuel and utility bills inflated by the same war driving yen weakness. The fiscal and monetary pressures are feeding each other in a loop Tokyo has limited tools to break.
From Australia, first-quarter GDP came in at 0.3% quarter-on-quarter and 2.5% annually, both below expectations, as a surge in data centre equipment imports and war-driven fuel costs dragged on net trade despite robust domestic demand. The Australian dollar shrugged, having already priced in a soft outcome, but with the May services PMI in contraction and the RBA having raised rates three times this year, the Q2 trajectory looks considerably more challenging.
On trade, the US moved to rebuild its tariff architecture on firmer legal ground, proposing levies of at least 10% on imports from around 60 countries under a Section 301 forced-labour investigation, with a higher 12.5% rate for China, India, Japan, South Korea and others. The Supreme Court struck down Trump's previous tariff regime in February; Section 301 is harder to challenge, and the comment period — closing July 6 — is designed to clear the decks before the existing Section 122 global levy expires that month.
And in a session that needed a counterpoint to the geopolitical gloom, SpaceX provided one. The company set a specific target price of $135 per share ahead of its Nasdaq roadshow, aiming to sell 555.6 million shares to raise $75 billion in what would be the largest IPO in history. The pre-roadshow fixed price is itself unconventional; it signals demand confidence at a stage when most companies are still haggling over a range.
Regional equities mainly performed strongly. Bitcoin and Ether continued their slide lower.
Why it matters
The USD/JPY 160 level is significant because Japan conducted large-scale currency interventions at that threshold in 2024, meaning traders are calibrating risk around a well-established precedent rather than a theoretical line.
The US shift to Section 301 as the legal basis for new tariffs is structurally different from the previous regime: Section 301 is harder to challenge in court, and the July 6 comment-period deadline is timed to replace the expiring Section 122 global levy before a legal gap opens.
Japan's supplementary budget being funded entirely through deficit bonds — while simultaneously subsidizing costs inflated by the same conflict weakening the yen — illustrates a self-reinforcing fiscal pressure that monetary intervention alone cannot resolve.
