Hawkish Pause: Fed Signals Hikes as Markets Diverge

For the week of Jun 20, Global markets navigated a hawkish pivot from the Federal Reserve this week, with Chair Kevin Warsh's debut press conference flagging potential rate hikes and lifting short-term Treasury yields. U.S. equities managed modest gains as resilient retail sales and easing oil prices — aided by a U.S.-Iran MOU on the Strait of Hormuz — offset the hawkish policy shock. China's onshore markets advanced on solid industrial data, though the Hang Seng Index fell sharply as offshore sentiment soured, compounded by a holiday-shortened week and persistent weakness in domestic consumption. Singapore's Straits Times Index outperformed the region, surging to a fresh high led by broad-based gains in banks, industrials, and transport names.

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🇺🇸 United States

Market Overview

U.S. equities posted a modest but broad-based advance in a holiday-shortened week — markets were closed Friday for Juneteenth — with sentiment buoyed by softer oil prices following reports of a U.S.-Iran agreement to reopen the Strait of Hormuz. The Nasdaq Composite (COMP) led the major indices with a gain of +2.43%, while the S&P 500 (SPX) added +0.93% and the Dow Jones Industrial Average (DJI) rose +0.71%; however, intraday volatility spiked on Wednesday when the Federal Reserve's updated projections and Chair Warsh's hawkish tone triggered a sharp sell-off in bonds and a temporary retreat in equities.

(Refer to the major indices' weekly performance tables below.)

Major Indices – Weekly Performance

·       Dow Jones Industrial Average (DJI): +0.71%

·       S&P 500 (SPX): +0.93%

·       Nasdaq Composite (COMP): +2.43% 

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Key Highlights and Outlook

1️⃣ Fed Delivers Hawkish Pause in Warsh's First Meeting

The FOMC held the fed funds rate at 3.50%–3.75% for a fourth consecutive meeting, but the tone turned decisively more hawkish. Updated projections removed the previously expected 2026 rate cut, and roughly half of policymakers now pencil in at least one rate hike this year. Chair Warsh — who did not submit his own projections — reinforced the Fed's price-stability mandate and announced a broad operational review of the central bank's communications and frameworks.

2️⃣ Inflation Forecasts Revised Higher; Rate Cut Base Case Abandoned
The Fed raised its 2026 headline PCE inflation forecast to 3.6% and core PCE to 3.3%, levels well above the 2% target. With services inflation yet to re-accelerate and the unemployment rate anchored near 4.3%, the Fed appears content to hold — but the policy debate has shifted from "when to cut" to "how long to hold, or whether to hike." Markets responded by pricing a higher fed funds path than the Fed's own projections imply.

3️⃣ Retail Sales Beat; Housing Data Remain Challenged

May retail sales rose 0.9% month over month, beating the 0.6% consensus and reflecting resilient household consumption. Control group sales, which feed into GDP calculations, advanced 0.7%. Housing data were more mixed: housing starts fell sharply to an annualised 1.177 million in May versus expectations near 1.445 million, while the NAHB housing market index dipped to 35 amid elevated mortgage rates and rising material costs. Pending home sales offered a partial offset, rising 4.8% year over year.

4️⃣ Treasury Yields Rise Sharply at the Front End

The hawkish Fed read-through pushed short-term Treasury yields notably higher, with the two-year note hitting its highest level in over a year. Investment-grade corporate bonds underperformed Treasuries modestly, while high-yield bonds outperformed on risk-on sentiment and the week's oil-price tailwind. The widening yield advantage of short-term bonds over cash has reinforced arguments for extending duration slightly out of pure cash holdings.

5️⃣ Oil Prices Ease on U.S.-Iran MOU; Energy Sector Lags

Reports that the U.S. and Iran signed a memorandum of understanding clearing the path to reopen the Strait of Hormuz dragged oil prices lower, providing a macro tailwind for inflation sentiment but weighing heavily on energy stocks. The Energy sector (XLE) was the week's worst performer, falling more than 6%, while the Technology sector benefited from the broader risk-on rebound and led all S&P 500 sectors to the upside.

6️⃣ Earnings Resilience Seen as Key Offset to Higher-for-Longer Rates

With monetary policy uncertainty likely to persist into the second half of 2026, the market's ability to sustain recent gains will hinge on continued earnings strength. Analysts see double-digit earnings growth as a viable offset to elevated discount rates, particularly if energy-driven inflation proves transitory. Sector rotation toward cyclicals and broader market participation beyond mega-cap technology remain constructive near-term signals.

S&P 500 Sectors in Focus

Technology was the clear outperformer of the week, rebounding strongly as risk appetite recovered and investors rotated back into growth-oriented names following the oil-price relief. Industrials also performed well, supported by the favourable macro backdrop from easing energy costs. On the downside, Energy was the week's laggard by a wide margin, dragged lower by the sharp fall in crude prices after the U.S.-Iran agreement.

(Refer to the SPX sector ETF weekly performance table below.)

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Technical Snapshot

The S&P 500 (SPX) reclaimed above the 7,500 level after previous week’s retracement, and reclaiming its 20-week moving average with improving breadth. The index has been consolidating within its three-week price range bound. Weekly uptrend still holding well.

📊 Weekly charts:

• DJI weekly chart
• SPX weekly chart
• Nasdaq weekly chart

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🇨🇳 China / Hong Kong

Market Overview

Chinese equity markets were mixed in a holiday-shortened week, with mainland China and Hong Kong closed Friday for the Dragon Boat Festival. Onshore markets drew support from better-than-expected industrial production data and easing oil prices, with the CSI 300 Index rising +3.44% and the Shanghai Composite (SSE) gaining +1.46%. By contrast, the Hang Seng Index (HSI) fell -3.21%, reflecting weaker offshore sentiment, persistent concern over domestic consumption, and continued pressure from the property sector.

Index Weekly Performance

·       CSI 300: +3.44%

·       Shanghai Composite Index (SSE): +1.46%

·       Hang Seng Index(HSI): -3.21%

 

Key Highlights and outlook

1️⃣ May Activity Data: Export Strength, Domestic Drag

China's May activity data underscored a widening split between export-facing and domestic sectors. Industrial production rose 4.5% year over year — up from 4.1% in April — supported by AI-driven manufacturing demand and robust external orders. In contrast, retail sales fell 0.6% year over year, the first annual decline since late 2022, while fixed asset investment contracted 4.1% in the first five months of the year. The surveyed urban unemployment rate eased slightly to 5.1%.

2️⃣ Property Sector Weighs Despite First-Tier City Green Shoots

Property investment fell 16.2% year over year in the first five months of 2026, and national home prices remained under pressure in May. However, new-home prices in first-tier cities rose for a third consecutive month, suggesting policy support measures are gaining traction in the largest markets. The recovery nonetheless remains geographically narrow and has yet to translate into broader private sector investment or consumer confidence.

3️⃣ PBOC Unveils Financial Market Initiatives; Short on Stimulus

PBOC Governor Pan Gongsheng announced measures to expand overnight reverse repo operations, narrow the short-term interest rate corridor, and promote offshore renminbi usage, alongside initiatives to position Shanghai as a yuan-denominated asset hub. While the announcements signal continued commitment to financial market infrastructure development, they did not constitute broad-based monetary stimulus, and markets appeared to interpret them as incrementally supportive rather than a major policy shift.

4️⃣ Maybank Favours Capex and Export-Linked Names; Top Picks Highlighted

Maybank Kim Eng's Dim Sum Weekly maintained a preference for capex-leveraged and export-oriented names over domestic consumption plays, citing the AI infrastructure and industrial upgrading tailwinds. CATL and SMIC were highlighted as well-positioned semiconductor and advanced manufacturing beneficiaries. MiniMax was flagged as a tactical catch-up opportunity versus Knowledge Atlas ahead of an upcoming model update, while CK Hutchison was cited for its asset monetisation story and defensive cash flow from its global infrastructure, ports, and telecom portfolio. (MSSG Research)

 

Technical Snapshot

The HSI's -3.21% decline this week pushed the index back below the 24,000 level, with the weekly candle printing a notable bearish reversal after the prior week's recovery attempt. The SSE Composite held above 4,050 support and remains in a gradual uptrend despite the modest weekly gain, suggesting mainland sentiment is more resilient than offshore flows imply. Near-term direction for the HSI will likely hinge on whether domestic data prints — particularly retail and property — begin to stabilise in June.

(Refer to the Hang Seng Index constituents’ weekly performance table below.)

📊 Weekly charts:

• SSE weekly chart
• HSI weekly chart

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🇸🇬 Singapore

Market Overview

Singapore equities were the standout regional performer this week, with the Straits Times Index (STI) surging +3.32% to close at 5,192.70 — a fresh multi-year high and one of the index's strongest weekly performances year to date. The advance was broad-based, with SATS topping the constituent table at +10.91% and YZJ Shipbuilding, SGX, Keppel, and the three local banks all posting meaningful gains. The STI's year-to-date return now stands at +11.76%, underpinned by consistent inflows into financials and selected industrials.

Index Weekly Performance

·       Straits Times Index (STI): +3.32%

 

Key Highlights and Outlook

1️⃣ STI Surges to Fresh Multi-Year High on Broad Participation

The STI's +3.32% weekly gain was supported by broad constituent participation, with 22 of 30 index members closing in positive territory. The move confirmed a breakout above the prior resistance zone near 5,050. Sustained buying in defensively positioned banks and high-quality industrials suggests institutional accumulation rather than short-covering, a constructive structural signal.

2️⃣ Banks Lead Gains; OCBC and DBS Among Top Contributors

All three local banks posted solid weekly gains, with OCBC (O39) advancing +4.81%, DBS (D05) rising +4.30%, and UOB (U11) adding +2.86%. The banking sector continues to benefit from a higher-for-longer global rate backdrop that underpins net interest margins, alongside resilient loan demand and improving fee income. With the Fed explicitly ruling out near-term cuts, the favourable rate environment for Singapore banks remains intact into the second half of 2026.

3️⃣ S-REITs and Property Stocks Lag as Rate Sensitivity Weighs

Against the week's broadly positive backdrop, S-REITs and property-linked names underperformed. HK Land (H78) was the weakest STI constituent at -3.68%. The hawkish Fed read-through reinforced concerns that rate relief for yield-sensitive sectors remains distant, keeping cap rate pressure elevated and limiting near-term re-rating potential for the S-REIT sub-segment.

(Refer to the STI weekly performance table below.)

📊 Weekly chart:

• STI weekly chart

 

📅 Week Ahead (22-26 June 2026)

U.S.

- Fed operational review announcements

- May PCE price index

 

🗓️ Overarching Watchpoint

The May U.S. PCE print is the week's binary risk event. A reading above the Fed's revised 3.6% forecast would materially increase the probability of a 2026 rate hike and could trigger a broader risk-off move across equities and credit; a print in line or below would ease the hawkish pressure and support the case for a prolonged but stable hold, keeping equity markets on firmer footing heading into mid-year.

Source: Some content and data are excerpted from publicly available market reports.

Breadth Builds: Tech Wobbles as Markets Rotate and SpaceX Debuts

For the week of Jun 13, global equity markets navigated a volatile but ultimately constructive week, as easing Middle East tensions and broadening market leadership offset mixed inflation data and turbulence in large-cap technology names. In the United States, all three major indices edged higher as the historic SpaceX IPO captured investor attention and rotation into cyclicals, financials, and small-caps gathered momentum even as semiconductor stocks pulled back sharply. Chinese equities delivered a split verdict — strong export data and resilient PPI growth underpinned the Shanghai Composite, while the Hang Seng slipped as weaker offshore sentiment and Pentagon scrutiny of Chinese technology firms weighed on Hong Kong-listed names. Singapore's Straits Times Index dipped modestly, dragged by profit-taking in the local banks and select industrials, even as S-REITs and logistics trusts provided partial support.

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🇺🇸 United States

Market Overview

U.S. equities extended their recovery for a second consecutive week, with the Dow Jones Industrial Average (DJI) gaining +0.66%, the S&P 500 (SPX) adding +0.65%, and the Nasdaq Composite (COMP) advancing +0.70%, as improving geopolitical sentiment around a possible U.S.–Iran agreement offset a sharp mid-week selloff in semiconductor stocks. Beneath the surface, the week was defined by rotation rather than breadth, with small-caps, financials, and defensives outperforming while the concentrated AI trade took a breather. The Russell 1000 Value Index outpaced its growth counterpart for the second consecutive week, reinforcing the broadening theme.

(Refer to the major indices' weekly performance tables below.)

Major Indices – Weekly Performance

·       Dow Jones Industrial Average (DJI):: +0.66%

·       S&P 500 (SPX):: +0.65%

·       Nasdaq Composite (COMP): +0.70%

 

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Key Highlights and Outlook

1️⃣ Semiconductor Pullback Interrupts AI Rally

The Philadelphia Semiconductor Index, which had nearly doubled year-to-date, fell approximately 12% before partially recovering, as profit-taking after a parabolic rally — rather than any fundamental deterioration — drove the move. Large cloud providers continue to ramp AI infrastructure spending, reinforcing the longer-term structural demand thesis even as near-term positioning resets. 

2️⃣ SpaceX Completes Record-Breaking IPO
SpaceX raised approximately USD 75 billion in the largest public offering in history, priced at USD 135 per share and implying a valuation near USD 1.8 trillion. With a free float of under 5%, index inclusion will be gradual — the S&P 500 has declined to fast-track eligibility, requiring a standard 12-month seasoning period — limiting near-term passive demand but preserving scarcity premium.

3️⃣ CPI Rises to 4.2% YoY as Energy Drives Headline Inflation

May CPI rose 4.2% year over year, the highest reading since April 2023, driven by a 10.7% month-over-month surge in energy prices within the PPI. Core CPI, however, moderated to +0.2% month on month (from +0.4% in April), with goods deflation reappearing for the first time in a year, providing the Fed with room to remain patient rather than pivot to tightening.

4️⃣ Fed Holds, Likely to Remove Easing Bias at June Meeting

With headline inflation energy-driven and core pressures contained, the Fed is expected to keep rates on hold while removing its explicit easing bias at the upcoming meeting. A prolonged pause — rather than a renewed tightening cycle — remains the base case, a backdrop that continues to support equity valuations as long as economic growth stays resilient and earnings momentum persists.

5️⃣ Market Breadth Improves; Equal-Weight SPX Outperforms

The equal-weight S&P 500 is now outperforming its cap-weighted counterpart by approximately 2 percentage points year-to-date (11% vs. 9%), with financials, healthcare, consumer staples, and small-caps gaining relative traction. This shift away from narrow mega-cap leadership toward broader participation is viewed as a constructive development for the sustainability of the bull market cycle.

6️⃣ Geopolitics: U.S.–Iran De-escalation Supports Risk Sentiment

President Trump's cancellation of planned U.S. strikes on Iran and reports of progress toward a bilateral agreement helped compress oil prices and Treasury yields through the latter part of the week. A sustained reopening of the Strait of Hormuz would provide meaningful relief to both energy prices and headline inflation — representing the key upside catalyst for a further broadening of equity market leadership.

 

S&P 500 Sectors in Focus

Sector performance diverged sharply in Week 24, with defensive and cyclical names leading while energy and communications services lagged.

(Refer to the SPX sector ETF weekly performance table below.)

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Technical Snapshot

The S&P 500 (SPX) at 7,431.46, posting a modest weekly gain that kept the index in a narrow consolidation range. The Index had fantastic nine-week up streak before 2.6% down by profit-taking and stabilising this week. Weekly uptrend still holding well.

📊 Weekly charts:

• DJI weekly chart
• SPX weekly chart
• Nasdaq weekly chart

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🇨🇳 China / Hong Kong

Market Overview

Chinese equity markets delivered a split result in Week 24, with divergent performance between onshore and offshore markets reflecting differing risk appetites and thematic drivers. The CSI 300 fell -0.82% while the Shanghai Composite (SSE) eked out a marginal +0.09% gain, as strong trade data and accelerating PPI provided some support to onshore sentiment. The Hang Seng Index (HSI) underperformed with a -0.98% decline, weighed by weaker offshore risk appetite, the Pentagon's expanded military-entity list targeting several blue-chip Chinese technology names, and renewed regulatory action in the e-commerce sector.

Index Weekly Performance

·       CSI 300: -0.82%

·       Shanghai Composite Index (SSE): +0.09%

·       Hang Seng Index(HSI): -0.98%

 

Key Highlights and outlook

1️⃣ Exports Surge 19.4% YoY, AI Hardware Drives Outperformance

China's May exports rose 19.4% year over year, accelerating from 14.1% in April and materially exceeding market expectations. Semiconductor exports more than doubled from a year earlier, with AI-related goods — electric vehicles, computing equipment, and advanced manufacturing — remaining the key engine of external demand. The trade surplus widened to USD 105.4 billion, reinforcing the structural role of exports as a buffer for the still-fragile domestic recovery.

2️⃣ CPI-PPI Divergence Widens; Margin Pressure Builds

China's PPI rose 3.9% year over year in May, accelerating for a third consecutive month and reaching its highest level since July 2022, driven by rising commodity and energy costs. CPI remained anchored at 1.2%, unchanged from April, highlighting the absence of meaningful cost pass-through to consumers. The widening CPI-PPI gap points to mounting pressure on corporate profit margins, particularly for domestic-facing industries with limited pricing power.

3️⃣ Pentagon Blacklist Expands to Alibaba, Baidu, BYD, WuXi AppTec

The U.S. Department of Defense expanded its list of alleged Chinese military-linked companies to include Alibaba, Baidu, BYD, WuXi AppTec, Yangtze Memory Technologies, and Unitree Robotics. The designation stops short of broad sanctions but restricts U.S. defence procurement and heightens regulatory and reputational risk. Several named companies have disputed the designation; investors should monitor for secondary effects on institutional ownership and index eligibility reviews.

4️⃣ 618 Festival Regulatory Action Creates Tactical Entry Opportunity

Regulatory action against e-commerce platforms over misleading advertising practices during the mid-year 618 shopping festival triggered a late-week pullback in the sector. While the immediate impact is sentiment-driven rather than structural, the dip presents a tactical entry for investors with medium-term conviction, particularly in names with diversified revenue streams and export-market exposure. Midea (00300.HK) and JD.com (09618.HK) are highlighted as well-positioned beneficiaries given their capacity to capture incremental AI-linked and cross-border demand. (MSSG Research)

 

Technical Snapshot

The Hang Seng Index closed at 24,718, extending its negative year-to-date trend (-3.56%) with a weekly loss of -0.98%, as the index struggled to sustain a recovery above the psychologically important 25,000 level. Near-term support is seen around 24,400–24,500, with a break below risking a retest of the April lows. The HSI's underperformance relative to the onshore CSI 300 reflects lingering offshore risk aversion tied to geopolitical developments and tech-sector regulatory noise; a resolution of U.S.–China technology tensions or a sustained rally in AI-linked names could be the catalyst needed to close the gap.

(Refer to the Hang Seng Index constituents’ weekly performance table below.)

📊 Weekly charts:

• SSE weekly chart
• HSI weekly chart

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🇸🇬 Singapore

Market Overview

The Straits Times Index (STI) slipped -0.48% to close at 5,025.80 in Week 24, paring back some of its year-to-date outperformance (+8.17%) as the local banking trio came under selling pressure and selected industrial names corrected. The retreat was orderly rather than alarming, with S-REITs and logistics trusts providing a partial cushion.

Index Weekly Performance

·       Straits Times Index (STI): -0.48%

 

Key Highlights and Outlook

1️⃣ Banks Retreat on Profit-Taking; Sector Remains Well-Supported

DBS (D05) fell -0.85%, UOB (U11) -1.01%, and OCBC (O39) -1.84% on the week, as investors took profits in the sector's strongest year-to-date performers after a sustained run. The pullback is likely technical in nature rather than fundamentals-driven — Singapore bank NIMs remain resilient in a high-for-longer interest rate environment, and capital return visibility is strong.

2️⃣ S-REITs Stage Selective Recovery; Rate Sensitivity in Focus

S-REIT performance diverged along quality and sub-sector lines, with logistics and industrial names outperforming while retail and commercial trusts lagged. Mapletree Logistics Trust (M44U, +3.39%), CapLand IntCom Trust (C38U, +3.08%), and CapLand Ascendas REIT (A17U, +2.43%) led the advance as market participants positioned for a potential moderation in U.S. Treasury yields following signs of cooling core inflation. A sustained decline in the 10-year UST yield toward 4.30–4.40% would be a meaningful tailwind for S-REIT valuations.

3️⃣ STI Consolidates Near 5,000; Support Holds Amid Global Choppiness

The STI's ability to hold above the 5,000 psychological support level in the face of global volatility and domestic bank profit-taking underscores the resilience of the local market's earnings foundation.

(Refer to the STI weekly performance table below.)

📊 Weekly chart:

• STI weekly chart

 

📅 Week Ahead (15-19 June 2026)

In the United States, markets will focus on the Federal Reserve's June FOMC meeting and accompanying press conference on Jun 16-17( US EST)

 

🗓️ Overarching Watchpoint

The single biggest binary risk for the week is the Federal Reserve's June policy statement and Powell's press conference. While no rate change is expected, the tone around the removal of the easing bias — and whether policymakers signal any concern about energy-driven headline inflation becoming entrenched — could move both Treasury yields and risk assets meaningfully in either direction, setting the trajectory for equity and credit markets into the second half of 2026.

Source: Some content and data are excerpted from publicly available market reports.

Holiday Data-Focused Lite Mode

 

U.S.-Iran Optimism Lifts Equities as Inflation Stays Hot

Global equities climbed in final week of May 2026, with sentiment anchored by rising hopes for a U.S.-Iran ceasefire deal and the reopening of the Strait of Hormuz, which pushed oil prices lower and lifted risk appetite. U.S. benchmarks closed at fresh record highs, with the Nasdaq leading the charge as AI-linked momentum held firm, even as April PCE inflation data printed hotter than expected and reinforced a hawkish Federal Reserve posture. China and Hong Kong markets were mixed — industrial profit growth accelerated sharply but fresh regulatory action against offshore brokerages weighed on Hong Kong sentiment and sent the Hang Seng lower. Singapore bucked the regional trend modestly, with the Straits Times Index slipping on profit-taking in financials and telecoms despite strength in select industrial and property names.

 

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🇺🇸 United States

Market Overview

U.S. equity markets advanced in a holiday-shortened week, with several major benchmarks closing at all-time highs as falling oil prices and reported progress on a U.S.-Iran peace deal bolstered investor sentiment. The SPX closed at an all-time record high of 7,581.65 on Friday, May 29, 2026, officially clinching its ninth consecutive weekly gain. Markets were closed Monday in observance of Memorial Day, but the remaining four sessions were enough to push risk assets higher.

(Refer to the major indices' weekly performance tables below.)

Major Indices – Weekly Performance

·       Dow Jones Industrial Average (DJI):: +0.90%

·       S&P 500 (SPX):: +1.43%

·       Nasdaq Composite (COMP): +2.39%

 

Monthly Performance — May 2026

May 2026 delivered a strong month for U.S. equities, with technology-led momentum driving the Nasdaq Composite to a +8.36% monthly gain, its best monthly performance year-to-date. The combination of easing geopolitical risk, resilient corporate earnings, and AI investment enthusiasm underpinned the broad monthly advance, even as elevated inflation kept rate-cut expectations firmly off the table.

(Refer to the major indices' monthly performance table below.)

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Key Highlights and Outlook

1️⃣ U.S.-Iran Ceasefire Hopes Drive Risk Rally

Reports of a 60-day ceasefire extension and a potential reopening of the Strait of Hormuz dominated the week's narrative. Oil prices fell sharply, boosting equities and supporting a ninth consecutive weekly gain in the S&P 500. While investor enthusiasm was tempered by news of fresh U.S. strikes on Iranian targets, risk appetite held firm through Friday on reports that a final deal was imminent.

 

2️⃣ April PCE Inflation Rises; Fed Stays Hawkish
The BEA's April PCE price index rose 3.8% year-on-year — the hottest reading since May 2023 — and core PCE accelerated to 3.3% annually. Fed Governor Cook and Vice Chair Jefferson both flagged upside inflation risks and reinforced the case for a prolonged hold. Markets continue to price a potential hike over the next twelve months, limiting the scope for meaningful Treasury yield compression.

 

3️⃣ GDP Revised Down, but Underlying Demand Holds

Q1 2026 GDP was revised lower to a 1.6% annualised pace, down from an initial 2.0% estimate, with the revision driven by weaker investment and consumer spending. However, the business investment and household spending proxy — a cleaner read on underlying activity — averaged a healthier 2.2% over the past six months, pointing to resilience beneath the volatile headline figure.

 

4️⃣ Durable Goods Orders Surge on Transport Equipment

April durable goods orders jumped 7.9%, driven by a 21.5% surge in transportation equipment orders. Core capital goods orders — a proxy for business investment — fell 1.1% after a strong March, moderating near-term capex expectations. The data reinforced a mixed but broadly solid investment backdrop, with AI-related infrastructure spending continuing to contribute meaningfully to aggregate growth.

 

5️⃣ AI Investment Cycle Continues to Underpin Tech

Anthropic's valuation approached $1 trillion in a pre-IPO round, underscoring sustained investor confidence in AI infrastructure. Business investment in informational processing equipment, software, and R&D surged 6.4% annualised in Q1, contributing a full percentage point to headline GDP. The scale of this AI investment cycle is now being compared to the IT boom of the 1990s, with corporate commentary indicating further spending commitments ahead.

 

6️⃣ Corporate Profits Remain Strong Heading into Summer

GDP-derived corporate profits rose 12% year-on-year in Q1 2026, the strongest reading since the post-pandemic rebound in 2021. Domestic non-financial corporate margins stood at approximately 18%, near post-Covid highs. The breadth and durability of profit growth supports an overweight view on large- and mid-cap U.S. equities as market leadership continues to broaden.

 

S&P 500 Sectors in Focus

Technology was the week's standout performer, extending its year-to-date lead as AI enthusiasm and a more favourable rate backdrop lifted large-cap names. Materials and Consumer Discretionary also posted gains, benefitting from improved risk sentiment and lower energy input costs. On the lagging side, Energy was the weakest sector by a wide margin as falling oil prices eroded the sector's earnings outlook, while Consumer Staples and Utilities retreated as defensive positioning unwound alongside the broader risk-on tone.

(Refer to the SPX sector ETF weekly performance table below.)

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Technical Snapshot

The S&P 500 (SPX) closed at fresh record highs, with price action holding comfortably above its 20-week and 50-week moving averages on continued volume. The Nasdaq Composite (COMP) confirmed technical breakout momentum, with the AI-driven mega-cap complex providing consistent breadth leadership through the week. The Dow Jones Industrial Average (DJI) lagged relatively but remained in a constructive trend; the near-term risk is a pullback should the Iran deal unravel or PCE data continue to surprise to the upside.

📊 Weekly charts:

• DJI weekly chart
• SPX weekly chart
• Nasdaq weekly chart

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🇨🇳 China / Hong Kong

Market Overview

China and Hong Kong markets were mixed during a shortened trading week, with Hong Kong closed on 25 May for Buddha's Birthday. The blue chip benchmark CSI 300 Index edged up 0.97%, the Shanghai Composite Index(SSE) fell 1.08%, reversing the prior week's modest gains as regulatory news flow weighed on sentiment. The Hang Seng Index (HSI) declined -1.65%, dragged by brokerage sector sell-offs following the CSRC crackdown on offshore online trading platforms. Southbound flows remained broadly negative on net, with Alibaba and Tencent among the top net sells for the week.

Index Weekly Performance

·       CSI 300: +0.97%

·       Shanghai Composite Index (SSE): -1.08%

·       Hang Seng Index(HSI): -1.65%

 

Key Highlights and outlook

1️⃣ CSRC Crackdown on Offshore Brokerages Rattles HK

China's securities regulator imposed fines and rectification measures on Tiger Brokers, Futu Holdings, and Longbridge Securities for operating without the required mainland licences. The action triggered sharp declines in offshore-listed brokerage shares and contributed materially to Hong Kong's weekly decline. Regulators appear focused on channelling retail flows through formal, regulated platforms such as Stock Connect.

2️⃣ Industrial Profits Surge but Recovery Remains Patchy

April industrial profits jumped 24.7% year-on-year, accelerating from 15.8% in March, supported by stronger earnings in energy, raw materials, and technology-related exports. However, consumer-facing industries including furniture and autos reported weaker profitability, highlighting the uneven nature of China's recovery. Policy support and external demand remain the key props for industrial earnings momentum.

3️⃣ AI Infrastructure Stocks Attract Southbound Interest

SMIC and Hua Hong Semiconductor led southbound net buys for the week, reflecting continued investor appetite for domestic AI infrastructure and semiconductor names. Baidu's AI cloud revenue surged 79% year-on-year in Q1 2026, with AI-powered services now accounting for more than half of group revenue for the first time. GDS Holdings also reported strong Q1 results, with adjusted EBITDA rising 47.2% year-on-year on hyperscale data centre demand.

4️⃣ Hong Kong Positions as Global Wealth Hub Rival

Hong Kong overtook Switzerland as the world's largest cross-border offshore wealth centre, with assets under management reaching USD 2.95 trillion according to BCG data. HKEX CEO Bonnie Chan separately pitched the city to Central Asian sovereign issuers as a secondary listing venue, citing average daily turnover of HKD 270 billion. The dual messaging underscores Hong Kong's ongoing effort to broaden its capital markets positioning despite lingering geopolitical sensitivities.

5️⃣ Consumer Platform Stocks Offer Selective Opportunities

NetEase (9999.HK) continued to demonstrate resilient earnings momentum with Q1 2026 revenue up 6.1% year-on-year and gross profit rising 14.8%, driven by strong gaming titles and expanding overseas operations. Tongcheng Travel (780.HK) posted 14.4% revenue growth and 19.4% adjusted profit growth in Q1, underpinned by resilient domestic travel demand and deepening penetration into lower-tier cities. Both names trade at undemanding valuations relative to peers. (MSSG Reports)

 

Technical Snapshot

The Hang Seng Index (HSI) closed at 25,182, retreating below near-term support amid brokerage sector headwinds and net southbound outflows. The SSE Composite remains in a corrective phase near the 4,050–4,150 range following the prior month's sharp advance, with the index down -1.08% for the week but still holding a modest year-to-date gain. Sentiment stabilisation will likely require a combination of cleaner regulatory news flow and confirmation that AI infrastructure demand is translating into broader earnings upgrades across the tech complex.

(Refer to the Hang Seng Index constituents’ weekly performance table below.)

📊 Weekly charts:

• SSE weekly chart
• HSI weekly chart

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🇸🇬 Singapore

Market Overview

The Straits Times Index (STI) dipped -0.60% for the final week of May. Despite the modest weekly pullback, the STI held a solid year-to-date advance of +8.43%, supported by a strong performance in May. SATS led all STI constituents with a gain of +17.38%, while City Development and Sembcorp Industries also posted meaningful weekly gains. At the other end, Jardine Matheson, Singtel, and Seatrium were the week's laggards.

Index Weekly Performance

·       Straits Times Index (STI): +0.19%

 

Key Highlights and Outlook

1️⃣ SATS Surges on Aviation Demand Recovery

SATS (S58) shot up +17.38% for the week, easily the best performer among STI constituents. The move likely reflects a combination of recovering air travel volumes, supported by FY26 revenue growth to a record S$6.35bn and higher cargo and flight volumes. The stock's year-to-date gain remains modest at +1.05%, suggesting the week's move may reflect catch-up with the broader recovery theme.

2️⃣ REITs Under Pressure from Rate and Macro Headwinds

Singapore's REIT sub-sector remained under pressure, with CapAscendas REIT (-0.79%), CapLand IntCom Trust (-0.87%), and Mapletree Industrial Trust (-0.51%) all in the red for the week. The persistently elevated rate environment continues to weigh on distribution yields relative to risk-free alternatives, keeping sentiment cautious. Keppel DC REIT bucked the trend with a +0.87% gain, supported by data centre demand tailwinds.

 

Technical Snapshot

The STI closed at 5,037.86, consolidating near the 5,000–5,100 support zone after last week's modest pullback. The index remains above its 20-week moving average, preserving the medium-term uptrend that has been in place since early 2026. A sustained hold above 5,000 would be required to maintain the constructive technical setup; a break below that level could signal a deeper retracement toward the 4,900 area.

(Refer to the STI stocks weekly performance table below.) 

📊 Weekly chart:

• STI weekly chart

 

📅 Week Ahead (1-5 June 2026)

U.S. May nonfarm payrolls report (Friday) as the key data event, with consensus expecting a moderation in job gains following April's stronger-than-expected print. ISM manufacturing PMI is due on Monday, with services PMI following mid-week.

 

🗓️ Overarching Watchpoint

The durability of the U.S.-Iran ceasefire narrative is the single biggest binary risk for the week ahead. A confirmed, durable deal with Strait of Hormuz reopening would further compress oil prices, ease inflation expectations, and extend the equity rally; a breakdown or fresh military escalation would quickly reverse the week's risk-on gains and reprice rate expectations higher.

Source: Some content and data are excerpted from publicly available market reports.