Hong Kong Shares May See Continued Consolidation

May CPI rose 4.2% y/y, the highest since April 2023, with energy up 23.5%, while producer inflation jumped 6.5%. Ahead of the June 17 Fed meeting (under Chair Kevin Warsh), bond markets price in a year-end rate hike. SpaceX’s IPO saw shares top $175 within two hours. Oracle and Adobe posted record quarters but shares fell amid higher capex and guidance. Michigan sentiment rose to 48.9.

Markets rebounded after President Trump called off threatened strikes on Iran, saying a regional deal was agreed in principle; oil fell and US stocks rose (Dow +1.85%, Nasdaq +2.5%, S&P 500 +1.8%). US May producer prices beat forecasts (PPI YoY 6.5% vs 6.4%). ECB raised its deposit facility rate to 2.25% (from 2.0%) to 2.40% key rate. Brazil services growth rebounded; Argentina CPI cooled.

Bloomberg reports China is drafting a plan to spend about 2 trillion yuan ($295 billion) over five years to build interconnected data centers nationwide, supporting Beijing’s AI push. The National Development and Reform Commission is working on a blueprint, with China Mobile and China Telecom set to run most sites and local suppliers, including Huawei, targeted for at least 80% of tech. Funding would rely mainly on sovereign debt and state funds.

A stronger-than-expected May U.S. jobs report pressured equities Friday, with nonfarm payrolls rising 172,000 vs. 85,000 expected and unemployment steady at 4.3%, according to the report. Investors scaled back near-term Fed rate-cut odds. Applied Digital (APLD) fell 11.9%, Lumen (LUMN) 9.1%, and Iridium (IRDM) 9.6%.

PBW, an equal-weight clean energy ETF, fell about 11% on June 5 after May nonfarm payrolls came in at 172,000 versus ~80,000 consensus, pushing the two-year Treasury yield to a 16-month high of 4.16% and lifting the 10-year to 4.47%. Enphase dropped ~18% and First Solar ~11%. Despite a 34% YTD gain, PBW is ~47% below its 2021 peak, with declines linked to higher long-term rates.

Markets opened the week after a Friday selloff tied to expectations for a rate hike. The S&P 500 fell 2.6% on Friday, the Dow 1.4%, and the Nasdaq 4.2%. Key catalysts include SpaceX’s IPO at $135/share valuing it around $1.78 trillion, Oracle’s fiscal Q4 earnings, and inflation data: CPI (expected +4.2% y/y) and PPI, plus the University of Michigan sentiment reading.