Investment Insights

CIO Viewpoints

Risk factors to watch out amid the latest Middle East conflict?

Daily Insights

Focus of the Day
  • Oil prices rose above key moving averages amid supply disruption concerns

Other Commentaries

  • China’s May retail sales rebounded, but industrial output slowed; US-UK signed trade deal; New York June manufacturing activity continued to decline

Market Analysis

FX Markets Analysis

Latest Technical Highlights

GBP - Uptrend↗

Support / Resistance

vs HKD 10.5185 / 10.8324

vs USD 1.34 / 1.38

The Bank of England will hold a rate meeting on Thursday. Given that the annual inflation rate of CPI in April is still high at 3.5%, the market generally expects the bank to remain on hold and maintain a relatively cautious policy stance. Technically, GBP/USD faces resistance at the 1.38 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

  • Progress in Sino-US trade talks and moderate inflation data continue to drive US equities higher. However, Israel-Iran tensions fuel risk aversion. Monitoring oil price trajectory and the June Fed policy statement
  • ECB officials signaling the end of the easing cycle, coupled with mixed recent data and Middle East tensions, suggest European equities could require further catalysts to extend gains
  • Asian markets are benefiting from multiple tailwinds, including India’s aggressive rate cuts to stimulate growth and South Korea’s reform agenda under its new government. In the near term, however, rising oil prices remain a key concern
  • Weakening of the US dollar and rising oil prices are supporting equity and currency gains in several Latin American and emerging markets. Nevertheless, these markets remain vulnerable to potential volatility stemming from geopolitical risks
  • HSI consolidated near YTD highs. Stronger-than-expected May retail sales in China have boosted market sentiment. Near-term focus will be on financial policy signals from the Lujiazui Forum and risks related to Middle East tensions
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

  • Softer US inflation pushed Treasury yields lower WoW. Investor focus is on the Fed's June policy decision and the updated dot plot
  • The pullback in US Treasury yields has bolstered US investment-grade credit. However, escalating Israel-Iran tensions could exert upward pressure on global inflation, potentially constraining the Fed’s easing pace
  • China's government bond issuance has surged significantly, while new loan growth came in below expectations. This suggests that China is likely to maintain its current accommodative monetary policy stance
  • US high-yield bonds continue to see strong inflows. However, the sharp rise in oil prices may influence inflation expectations and the Fed’s rate-cut trajectory, leaving the high-yield market vulnerable to shifts in risk sentiment
  • First successful USD bond issuance by a Chinese private developer in two years improved property sector sentiment. Investors are optimistic about further local property policy support
  • Weaker USD and lower UST yields supported emerging market bonds, but elevated geopolitical risks warrant vigilance for volatility spikes
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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