Investment Insights

CIO Viewpoints

3Q outlook : Expect more flows toward Asia

Daily Insights

Focus of the Day
  • Mild US May PCE inflation reinforced rate cut expectations, likely capping USD strength

Other Commentaries

  • G7 and US reached a tax deal to avert a global tax war; PBoC's Q2 meeting highlighted maintaining a flexible monetary policy; Indian equities hit highest since Oct last year

Market Analysis

FX Markets Analysis

Latest Technical Highlights

GBP - Uptrend↗

Support / Resistance

vs HKD 10.5972 / 10.9897

vs USD 1.35 / 1.40

BoE Governor Bailey stated that the recent rebound in inflation has brought uncertainty to medium-term price stability, while also noting signs of a cooling labor market. His remarks reflect a cautious policy stance, suggesting that higher interest rates may still support the pound. Technically, GBP/USD resistance is seen at the 1.40 level.

Legends

Uptrend ↗  Sideways →  Downtrend ↘

Pertaining to historical trend technical analysis only and do not reflect any forecasts.

Provided by Hang Seng Investment Services Limited

Stock Markets View

  • US stocks hit fresh record highs amid easing Middle East tensions, progress in US-China trade talks, and expectations of rate cuts. However, market focus remains on US trade policy and tax reform implications
  • European equities posted their strongest weekly gain since mid-May on hopes of a US-EU trade deal before the deadline. However, slowing corporate earnings growth may cap further upside
  • Japanese equities rebounded to a one-year high, while South Korean stocks reached a near three-year peak. Attractive valuations and a weaker USD outlook could drive further inflows. Upgraded to Positive
  • Despite lingering tariff uncertainties, improving geopolitical sentiment and a softer USD may sustain the recent rally in emerging market equities and currencies. Upgraded to Neutral
  • China’s continued rollout of subsidies for trade-in programs and financial measures to boost consumption, coupled with progress in Sino-US trade talks, could lift the Hang Seng Index toward its YTD high of 24,700
Legends

Positive - Expect that the particular asset class potentially may perform well relative to the relevant major global benchmark(s) in the long run
Neutral - Expect that the particular asset class potentially may perform in line relative to the relevant major global benchmark(s) in the long run
Cautious - Expect that the particular asset class potentially may not perform well or in line relative to the relevant major global benchmark(s) in the long run

Provided by Hang Seng Investment Services Limited

Bond Markets View

  • Benign US inflation data supports the case for Fed rate cuts, which may stabilize Treasury performance in the near term
  • The US-G7 tax agreement provides long-term stability for US corporates. Rising rate-cut expectations pushed US investment-grade bonds to multi-year highs
  • Sentiment remains supportive in India, with the Reserve Bank of India’s rate cuts and proposed lending rate reductions bolstering issuer performance
  • Rate-cut expectations have pushed US high-yield bond issuance in June to its highest level since September last year, but limited room for further spread compression warrants caution
  • Upgraded to Positive for Q3 given attractive valuations compared to global peers, with Indian corporate bonds expected to continue driving market demand
  • A softer USD and declining Treasury yields are tailwinds, but oil price volatility poses risks for energy-export-dependent emerging market credits
Legends

Positive - Expect that the particular asset class potentially may perform well relative to the relevant major global benchmark(s) in the long run
Neutral - Expect that the particular asset class potentially may perform in line relative to the relevant major global benchmark(s) in the long run
Cautious - Expect that the particular asset class potentially may not perform well or in line relative to the relevant major global benchmark(s) in the long run

Provided by Hang Seng Investment Services Limited

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