June Newsletter

On June 17, Trump and Iranian President Pezeshkian signed a deal at the Palace of Versailles — yes, the fancy one in France — to end the war and reopen the Strait of Hormuz. Markets went nuts. Japan’s stock market jumped 5.5% in one morning. Oil dropped from $81 to $74 in two days. Eighteen ships sailed through Hormuz the next day — the most since the war started.

But here’s the thing lah. A few days later, Iran said “actually, Hormuz is closed again” — blaming Israel and US “bad faith.” By June 30, only 5 ships per day were going through, versus the normal 93. Mines haven’t been cleared. Insurance companies won’t cover the ships yet.

Let’s do the full journey so you can see how wild this has been:

Markets are basically saying “the war is over, oil supply is coming back.” But remember — ships still aren’t moving through Hormuz normally. The price is running ahead of reality. We’ve seen this movie before, just in reverse — oil spiked on war fears before the Strait was actually blocked.

Remember last month when we asked “is $725 billion in AI spending justified?” Well, June answered — and it wasn’t pretty. AI chip stocks lost $1.4 trillion in value. Nvidia dropped 18% from its May record. Broadcom crashed 7.5% in one day. The Nasdaq fell 6% for the month.

What happened? GPU rental prices crashed 31% in three weeks — meaning AI computing power is getting cheaper fast (bad for chip sellers). Investors started asking “okay, you’re spending hundreds of billions… where’s the revenue from AI?” And the hawkish Fed made expensive tech stocks less attractive.

NPR literally ran a story titled “Is AI one big bubble?” That’s when you know sentiment has shifted.

The Fed (June 17): New chairman Kevin Warsh’s first meeting. He kept rates at 3.50-3.75%, but here’s the surprise — the Fed’s projections now hint at a possible rate hike this year. Yeah, you read that right. Everyone was hoping for cuts, and instead the Fed said “actually, inflation is still a problem.” Rate cuts in 2026? Dead.

The ECB (June 11): Europe actually raised rates — first time since September 2023. Up 25 basis points to 2.25%. Eurozone inflation hit 3.2%, driven by lingering energy costs from the war. Even though oil has crashed, the earlier price shock is still flowing through to everyday prices. There’s always a lag.

It erased its entire 2026 gain in one day. Then kept falling.

The full journey: Gold started 2026 around $3,200. It shot up to an all-time record of $5,589 in January — everyone was scared, everyone wanted gold. Then it pulled back to $4,100 in March (dollar surge), recovered to $4,540 in May (sideways), and in June it crashed to ~$4,000 — down 12% in one month. On June 5 alone, gold dropped 3.27% and wiped out its entire 2026 gain in a single session.

Why did gold fall? Three things hit at once. First, the Iran ceasefire reduced fear — gold loves fear, and when people feel safe, they sell gold and buy stocks. Second, a blowout US jobs report killed any remaining hope of Fed rate cuts — higher rates make bonds and savings accounts more attractive vs. gold (which pays you nothing to hold it). Third, the strong dollar made gold more expensive for anyone buying in euros, yen, or ringgit — so demand dropped globally.

But the smart money is still buying. Here’s the twist most people miss — while regular investors panicked and pulled $2 billion out of gold ETFs in May, central banks kept buying. They bought 244 tonnes in Q1 2026 alone, plus another 17 tonnes in April. That’s four straight years of net buying. Countries like China, India, and Turkey are stacking gold because they want less dependence on the US dollar. That’s a long-term play, not a short-term trade.

The DXY hit a 14-month high. Here’s why your groceries might get more expensive.

What happened: The Dollar Index (DXY) surged from 98.9 in May to 101.3 by end of June — its best month since July 2025, briefly touching 101.8, a 14-month high. When the dollar strengthens, almost every other currency weakens against it. The ringgit went from RM3.97 to RM4.10. The yen hit 161. Asian currencies across the board came under pressure.

Why it surged: The new Fed chair’s hawkish stance (hinting at rate hikes) pulled global money into US assets. Higher US interest rates = higher returns on US bonds = everyone wants dollars. The AI selloff also triggered a “flight to safety” — when markets panic, money flows to the dollar.

How a strong dollar affects YOU in Malaysia:

Crypto’s worst month in a long time. And AI took its lunch money.

Bitcoin crashed from ~$73K in May to ~$59,860 by June 29 — below $60,000 for the first time since 2024. That’s 18% gone in a month. ETF money is flowing out, the CLARITY Act (crypto regulation) got delayed, and the real killer? Money is leaving crypto and going into… AI stocks. Which then also crashed. So crypto holders got hurt, switched to tech, and got hurt again. Rough times.

The strong dollar and hawkish Fed are making risk assets (crypto, meme stocks) less attractive. When you can earn 3.75% in a US savings account risk-free, the appeal of volatile crypto fades. For now, Bitcoin is stuck — too expensive for new buyers, too painful for holders to sell. Yahoo Finance’s headline said it all: “Bitcoin hits its lowest level in years.”

While everyone was watching the Iran deal, Trump was busy picking fights with… basically the entire world. In June, the US proposed new tariffs on 60 countries (up to 12.5%) over forced labor practices. That hits China, the EU, Japan — almost everyone. On top of that, steel and aluminum tariffs went up to 25% from June 8.

Then the USMCA bombshell. On June 10, Trump said he’s “not looking to renew” the US-Mexico-Canada trade agreement — the deal HE created in his first term. USMCA covers $1.3 trillion in cross-border trade. Canada had literally just asked to renew it for another 16 years on July 1. Even US business groups are begging him to keep it.

Japan’s stock market had a historic moment — the Nikkei 225 touched 70,000 for the first time ever, hitting 72,831 on June 22. To put that in perspective, the Nikkei spent 35 years trying to get back to its 1989 peak of 38,957. It doubled that in the last two years. Japan’s market is up 33% in 2026 alone, mostly riding the AI wave.

But what goes up fast… The global AI selloff hit Japan hard. SoftBank, Advantest, Tokyo Electron — all the AI darlings — got hammered. The Nikkei crashed 4.15% in a single session, dropping back below 70,000 to close at 69,361 by month-end. The yen also weakened to 161 per dollar, which is great for Japanese exporters but bad for everyone else in Asia (it makes Japanese goods cheaper, competing with Malaysian exports).

European defense stocks were THE hot trade in 2025 and early 2026. Germany pledged to spend 108 billion euros on defense (up 25%), aiming for 3.5% of GDP by 2029. Everyone bought Rheinmetall, SAAB, and other defense companies expecting unlimited government contracts.

Then on June 24, Germany announced it’s scrapping plans to build six F126 warships — a multi-billion euro project. Rheinmetall crashed 18% in a single day, its worst since 1989. The lesson? Government defense spending is political — it can change direction overnight. The market went from “infinite defense money” to “wait, governments can cancel things?” in one headline.

While AI stocks crashed globally, there’s a quieter story that’s actually bullish for Malaysia. The country has attracted RM144.4 billion (~USD 30 billion) in data centre and cloud investment since 2021 — with 143 approved projects. Over two-thirds of ALL data centre capacity being built in Southeast Asia is in Malaysia. Read that again.

PM Anwar allocated RM2 billion for a sovereign AI cloud, part of a bigger RM5.9 billion push for AI and digital innovation. The market is projected to grow from USD 4 billion in 2024 to USD 13.6 billion by 2030 — that’s 22% annual growth. This is why the ringgit was so strong earlier in the year and why foreign investment keeps flowing in.