This week, the ceasefire between the US and Iran collapsed on 8 July, sending Brent crude up over $78 a barrel. Elsewhere, Samsung's record profit failed to stop a sharp selloff in its shares on 7 July, part of a $2.1 trillion chip rout since 22 June. The same week, HM Treasury designated Microsoft, Google Cloud, Amazon Web Services and Oracle as the UK financial sector’s first critical third parties, and Swift's blockchain ledger went live for 24/7 cross border payments, with 17 banks piloting live transactions. Read more on the week's key developments: 1. Strait of Hormuz ceasefire collapse sends Brent crude back above $78/bbl The ceasefire between the US and Iran collapsed on 8 July, and the US resumed strikes near the Strait of Hormuz days after three commercial vessels were attacked in the waterway, prompting the Joint Maritime Information Center to raise its threat assessment for transiting ships to severe. Brent crude jumped 5.2% to settle at $78.02 a barrel, reversing a slide that had brought prices back toward levels seen before the war. The US Treasury separately revoked its 60-day waiver permitting Iranian oil sales, barring transactions from 17 July onwards. The International Energy Agency (IEA) warned that prolonged tensions could delay efforts to rebuild global oil inventories later this year, while the United Arab Emirates raised crude production to a record high last month as Gulf producers work to offset disruption elsewhere in the region. 2. UK designates cloud hyperscalers as critical third parties for financial stability HM Treasury announced on 10 July that Microsoft Ireland Operations Limited, Google Cloud EMEA Limited, Amazon Web Services EMEA SARL and Oracle Corporation UK Limited would be designated as critical third parties from 13 July. Their systemic services to the financial sector will be overseen jointly by the Bank of England, the Prudential Regulation Authority and the Financial Conduct Authority, under requirements covering annual self-assessments, scenario testing, incident-management exercises and incident reporting. The designation came in the same week as the Bank of England’s July Financial Stability Report, which warned that a correction in elevated AI-related equity valuations could prompt broader market repricing, amid rapidly growing infrastructure investment and debt financing by hyperscalers. UK financial regulators can now oversee the providers directly in relation to their systemic services to financial institutions, rather than addressing the risks solely through the banks, insurers and market-infrastructure firms that rely on them. 3. Samsung's record profit fails to stop a $2.1 trillion chip selloff Samsung Electronics reported preliminary second-quarter operating profit of KRW 89.4 trillion (US$58.4 billion) on 7 July, up 19-fold from a year earlier and above market expectations. Despite the earnings beat, the shares fell about 7% on the day after having gained roughly 150% this year, as investors weighed profit-taking against concerns that hyperscalers could moderate AI infrastructure spending. The Kospi fell nearly 5% as foreign investors sold Korean chipmakers amid concerns the semiconductor cycle may be approaching a peak. Yahoo Finance's index of nearly 60 semiconductor stocks has lost roughly US$2.1 trillion in combined market value since its 22 June peak. Even so, SK Hynix completed its US$26.5 billion Nasdaq listing on 9 July and gained about 13% on its market debut, highlighting continued investor demand for leading AI infrastructure companies despite heightened volatility across the sector. 4. Swift's blockchain ledger goes live for 24/7 cross border payments Swift said on 9 July that its blockchain based shared ledger is ready for initial use, with 17 banks across six continents, including HSBC, Citi, BNP Paribas, DBS, Standard Chartered and BNY, preparing to pilot live transactions using tokenised deposits. The ledger runs on an Ethereum Virtual Machine compatible architecture built on Hyperledger Besu, and lets participating banks move customer funds overnight and on weekends before completing final settlement through existing rails. The pilot arrives a month after a separate consortium including JPMorgan, Bank of America, Citi, BNY and Wells Fargo announced plans for a competing tokenised deposit network through The Clearing House, targeting a first half 2027 launch. Round-the-clock settlement changes the liquidity assumptions banks have built around fixed cutoff times, requiring treasury desks to manage funding and intraday liquidity across a continuous settlement window rather than a single trading day. 5. Circle wins final OCC approval for a national trust bank charter The Office of the Comptroller of the Currency (OCC) approved Circle Internet Group's application to open First National Digital Currency Bank NA on 10 July. The new bank will operate as Circle National Trust. It will hold digital assets in safekeeping for Circle and its affiliates, and may take on management of the USDC reserve in future once approved. Circle applied for the charter in 2025 and received conditional approval in December. Circle's OCC approval puts USDC's custody under direct federal oversight, the same regulatory path the OCC has now opened to BitGo, Ripple, Paxos and Fidelity Digital Assets. Circle's charter brings stablecoin custody inside the same regulatory perimeter banks operate under. Standard Chartered and BNY, which have launched USDC minting and redemption services with Circle, already let institutional clients access the stablecoin directly through the bank rather than a separate Circle account. 6. UniCredit's Commerzbank tender offer concludes, ECB approval still required UniCredit announced on 8 July that 17.60% of Commerzbank's shares were tendered in the extended acceptance period, bringing its total position, including its existing 26.77% direct stake and derivatives, to 47.59%, or 49.65% of voting rights. Commerzbank disputed the figure's significance, saying fewer than 2% of tendered shares came from independent institutional or retail holders, with the rest tied to UniCredit through swap arrangements. UniCredit's stake transfer still needs approval from the European Central Bank, which has up to 90 days to grant for any stake above 30%. Germany, which holds 12% of Commerzbank from the 2008 bailout, has said the deal is unacceptable regardless of price. 7. PBoC governor unveils Bond Connect expansion and offshore RMB liquidity measures in Hong Kong PBoC Governor Pan Gongsheng announced on 7 July that the Southbound Bond Connect's annual net investment quota will rise from RMB 500 billion ($73.5 billion) to RMB 800 billion ($117.6 billion), close to 60%, with the connect gaining access to bond repo financing and expanding to HKD, RMB linked and Macao bonds. Pan confirmed the cross border central bank repo facility first announced at the Lujiazui Forum has completed its first signing with the Hong Kong Monetary Authority (HKMA). The HKMA is also more than doubling its RMB Business Facility, from RMB 200 billion ($29.4 billion) to RMB 500 billion ($73.5 billion), effective 10 July, with tenors extended to nine months, two years and three years. The measures broaden Bond Connect's role beyond market connectivity by integrating trading, repo financing and market infrastructure more closely across the mainland and Hong Kong, with the PBoC guiding the China Foreign Exchange Trade System to work directly with the HKMA and the Securities and Futures Commission (SFC) on the upgrade. 8. IMF holds global growth forecast at 3.0%, flags AI correction as a live downside risk The IMF's July World Economic Outlook Update, released on 8 July, held global growth at 3.0% for 2026 and 3.4% for 2027, broadly unchanged on a cumulative basis from April. The Fund described the year as a tug of war between the war shock weighing on energy importers and an AI driven technology upcycle lifting countries positioned in the value chain. China's 2026 forecast was revised up to 4.6%, the euro area was cut to 0.9%, and the Middle East and Central Asia region is projected to drop to 0.7% growth this year, tied to the timeline of the ongoing Strait of Hormuz conflict disruptions. Global headline inflation was revised up to 4.7%, and the Fund said the disinflation trend in place since early 2024 has stalled. South Korea's 2026 forecast was raised because of strong AI-related export growth, with the Fund noting Korea would also be at risk if that demand slowed. On inflation, the Fund said the number to watch is not this year's headline rate but whether medium and long-term inflation expectations start to drift, which would leave central banks with less room to manage the current shock. 9. New Zealand hikes rates as Malaysia holds amid Hormuz ceasefire collapse The Reserve Bank of New Zealand raised the Official Cash Rate by 25 basis points to 2.50% on 8 July, a widely expected move as the Committee looked to bring inflation back to target amid renewed Middle East-driven energy cost pressure. Bank Negara Malaysia held its Overnight Policy Rate at 2.75% on 9 July for a seventh consecutive meeting, keeping its 2026 growth forecast at 4% to 5% on resilient second-quarter domestic demand and stronger-than-expected exports. Markets will be closely watching how Gulf risk evolves. At its latest briefing on July 8, the IMF's Deputy Director of Research, Petya Koeva Brooks, said a renewed conflict in the Middle East would raise commodity prices, and from there inflation, with the potential to unanchor inflation expectations. 10. Central Bank of Egypt holds for a third meeting as reserves climb and ceasefire risk lingers The Central Bank of Egypt's Monetary Policy Committee held its key rates unchanged on 9 July, keeping the overnight deposit rate at 19%, the overnight lending rate at 20% and the main operation and discount rates at 19.5%, matching market expectations. According to the Central Bank of Egypt's (CBE) own CPI Press Release, published the same day, annual urban headline inflation, the measure the CBE targets for policy, eased to 14.3% in June from 14.6% in May, and net international reserves reached $55.07 billion at the end of June. Egypt's 12-month treasury bill yield of roughly 24.7% is high enough to attract foreign investors into Egyptian pound assets even after accounting for the currency's expected depreciation. Cutting rates now would narrow that margin and risk slowing the foreign inflows the country depends on to support its reserves. What to watch US bank Q2 earnings (14 July), Bank of Korea's rate decision (16 July), the ECB's rate decision (23 July), the Federal Reserve's FOMC meeting (28 to 29 July), the Bank of Japan's policy meeting (30-31 July), Commerzbank's second quarter results (6 August), Singapore banks’ Q2 earnings (6-7 August). The Asian Banker Weekly Brief is a roundup of the biggest macroeconomic, industry and regulatory developments affecting banking globally.
