Trump rings the opening bell at the White House! Predicts 'US stocks will soar to the moon'

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PBOC Comments Spark Sharp Rally in Hong Kong Stocks; Tech Sector Drives U.S. Market Gains [Ping An Asset Management (Hong Kong) Weekly Market Recap]

Pan Gongsheng, Governor of the People’s Bank of China, explicitly stated that greater financial support will be provided to bolster Hong Kong’s development as an international financial center, and that China’s foreign exchange reserves may increase their allocation to Hong Kong assets in the future—significantly boosting investor enthusiasm for Hong Kong equities. The Hang Seng Index closed Friday at 24,175.12, surging 3.53% from the previous week. Mainland A-share markets continued to weaken: the CSI 300 Index closed Friday at 4,780.79, down 1.27% for the week; the CSI 500 Index ended at 8,503.97, falling 2.76% over the week; and the CSI 1000 Index closed at 8,198.31, down 4.90%.

U.S. equities extended gains, driven by technology stocks. The Nasdaq closed at 29,825.11, up 1.69% for the week. The S&P 500 closed Friday at 7,575.39, rising 1.23% from the prior week. The Hang Seng Tech Index stood out, closing Friday at 4,721.66, up 4.95% for the week, while the Wind Tech Select HKD Net Return Index closed at 4,067.59, gaining 4.20% over the week.

High-dividend Hong Kong stocks rebounded significantly alongside the broader market. Last week, the CSI Hong Kong Dividend Index closed at 3,631.48, up 2.48% from the prior week. The Solactive Global Pacific Equity Select HKD Net Return Index closed Friday at 2,010.83, rising 0.50% for the week.

Money market funds remained stable, with the U.S. Secured Overnight Financing Rate (SOFR) declining slightly to its latest reading of 3.53%.

Key market events:

The U.S.-Iran memorandum of understanding became effectively defunct just three weeks after taking effect. Following attacks on multiple vessels in the Strait of Hormuz, the U.S. launched airstrikes on Iran for two consecutive days and revoked oil sanctions waivers. Trump further threatened to blockade Iranian ports and possibly take control of its oil export hubs. Tehran retaliated against U.S. allies in the Persian Gulf region. Shipping through the Strait of Hormuz has nearly ground to a halt, pushing crude oil futures toward their largest weekly gain in nearly two months.

Minutes from the Federal Reserve’s June meeting showed heightened concerns among policymakers about inflation, while a New York Fed survey revealed that consumers’ inflation expectations for the next three years hit a four-year high. The head of Germany’s central bank said the situation in the Middle East is worrying and that another European Central Bank rate hike cannot be ruled out. The IMF largely maintained its global economic growth forecast for this year, noting that the AI boom could help offset the negative impact of Middle East conflicts, but emphasized that economic risks remain skewed to the downside.

China’s inflation momentum showed signs of stalling in June. The People’s Bank of China’s quarterly meeting statement noted the economy still faces an imbalance of strong supply and weak demand, and for the first time highlighted structural divergence as a challenge. Regulators intensified efforts to mitigate financial risks, taking over Zhongbang Bank and approving the bankruptcy of Zhongrong Trust. Meanwhile, as the AI boom elevated credit risks in Taiwan’s stock market, the governor of Taiwan’s central bank issued a rare appeal urging investors not to overuse leverage.

At the NATO summit, Trump sharply criticized European allies like Spain, accusing them of disappointing Washington on Iran. NATO is reportedly considering canceling next year’s summit to reduce friction with the U.S. president. Trump expects China’s leader to visit the U.S. around September 24. Several current and former Chinese officials, including former ambassador to the U.S. Cui Tiankai, have recently held talks with American experts. Burnham has secured support from most Labour Party MPs in the UK and is poised to become the next prime minister.

For the week, the Hang Seng Index rose 3.53%. By sector, consumer discretionary contributed the most to the index, while materials weighed it down the most. Southbound capital recorded a net inflow of HK$39.1 billion this week. For the week, the Hang Seng Index rose 2.99%. By sector, consumer discretionary contributed the most to the index. Southbound capital recorded a net outflow of HK$1.88 billion this week.

Key economic data:

On Thursday, the median U.S. home price rose 1.8% year-over-year to a record $440,600.

On Thursday, U.S. existing home sales in June came in at a seasonally adjusted annual rate of 4.09 million units, below the expected 4.20 million; the prior month’s figure was revised upward from 4.17 million to 4.19 million.

On Thursday, initial U.S. jobless claims for last week totaled 215,000, slightly below the forecast of 218,000 and unchanged from the previous week’s unrevised reading of 215,000.

On Wednesday, final data showed U.S. wholesale inventories rose 0.1% month-over-month in May, down from the preliminary estimate of 0.3%. U.S. wholesale sales surged 3.4% in May, marking the largest monthly increase since January 2022.

On Wednesday, the New York Federal Reserve released its monthly survey data on July 7, showing that U.S. consumers’ inflation expectations for the near and medium term rose in June, while long-term inflation expectations remained unchanged.

On Tuesday, the New York Fed’s one-year inflation expectation for June in the U.S. rose to 3.67%, up from the previous reading of 3.46%.

On Tuesday, U.S. imports increased by 3.3% month-over-month in May, while exports declined by 3.2%.

On Tuesday, the U.S. trade deficit in May stood at USD 77.6 billion, compared with an expected deficit of USD 78.5 billion.

On Tuesday, U.S. ADP employment rose by 21,000 last week, down from the prior figure of 30,750.

On Monday, the U.S. ISM Services PMI for June came in at 54, matching both the forecast and the previous reading of 54.5.

On Monday, the final S&P Global Services PMI for June in the U.S. was 51.2, down from 51.3; the final S&P Global Composite PMI for June was 51.9, down from 52.2.

Key market news:

On Friday, the U.S. Commodity Futures Trading Commission (CFTC) announced an emergency suspension of the self-certification filing that had previously allowed the CME to launch 24/7 crude oil futures trading.

On Thursday, New York Fed President Williams said it remains unclear how much further the Federal Reserve’s balance sheet can shrink, adding that discussions should not focus on the nominal size of its holdings.

On Thursday, the U.S. Trade Representative stated that Trump wants to reduce the trade deficit with Mexico and noted that findings from the Section 301 investigations into Canada and Mexico are expected soon.

On Thursday, the State Council issued the '15th Five-Year Plan Carbon Peak Action Plan,' outlining key priorities such as power system flexibility resources and new energy storage to advance carbon peaking goals.

On Wednesday, Trump stated that U.S. forces might strike Iran again and mentioned the possible reinstatement of a naval blockade on Iran.

On Wednesday, the People's Bank of China's Monetary Policy Committee, at its second-quarter regular meeting, called for enhancing the combined effect of new and existing policies, maintaining ample liquidity, and strengthening financial support for areas such as expanding domestic demand and technological innovation.

On Wednesday, Trump declared that the U.S.-Iran memorandum of understanding was 'terminated,' signaling further deterioration in U.S.-Iran relations.

On Wednesday, the National Disease Control and Prevention Administration and the National Health Commission released the National Immunization Schedule for Children (2026 edition), specifying that the bivalent HPV vaccine will be included in the national immunization program.

On Wednesday, the National Institute of Data Development announced that a unified national data property rights registration system has been established, helping reduce transaction costs in data circulation and promoting a nationally integrated data market.

On Wednesday, the Financial Regulatory Authority, together with Shanghai Municipality, issued measures to accelerate the development of Shanghai into an international reinsurance center, proposing arrangements to guide institutional deployment and improve unified registration systems.

On Tuesday, the Hong Kong Securities and Futures Commission said it is discussing with the People's Bank of China further optimization of Swap Connect and advancing the co-development of an electronic fixed-income and foreign exchange trading platform in Hong Kong.

On Tuesday, central bank governor Pan Gongsheng said the PBOC would support the Hong Kong Monetary Authority in increasing the size of its RMB liquidity facility from RMB 200 billion to RMB 500 billion and extending its usage period.

Last Saturday, the National Data Administration issued the 'Guidelines for Data Property Rights Registration (Trial),' promoting data property rights registration and secure, compliant data circulation.

Last Friday, the central bank announced it would conduct RMB 1 trillion in three-month outright reverse repos to maintain ample liquidity in the banking system.

Weekly Market Brief:

The rapid advances in artificial intelligence have led investors to anticipate a surge in productivity and demand, causing significant volatility in related stocks recently. Although demand for computing power remains robust, market concerns persist over the return on investment (ROI) from massive capital expenditures, leading to pronounced structural divergence within the tech sector amid ongoing volatility.

Geopolitical tensions in the Middle East have eased following the U.S. and Iran signing a memorandum of understanding, yet U.S.-Iranian conflict continues, with new disruptions emerging around the Strait of Hormuz. Meanwhile, rising global inflation has raised alarms at the Federal Reserve, and market worries over a 'higher for longer' interest rate environment have dampened risk appetite.

On the macro front, domestic demand in China remains weak. Although the property market has shown marginal improvement under a package of supportive policies, the sector is still undergoing deep adjustment and bottoming out. Policy guidance continues to emphasize 'stability with progress' and high-quality development. Moreover, the global trade environment remains complex and volatile, fueling strong short-term risk-aversion among investors. Domestically, fiscal and monetary policies are working in concert, with ultra-long special treasury bonds and government investment funds accelerating their deployment to stabilize growth through new quality productive forces and major infrastructure projects. Despite lingering market concerns about the sustainability of domestic demand recovery and corporate earnings, stronger policy support and visible economic resilience provide a solid floor for the market.

In the U.S., resurgent inflation has complicated the Federal Reserve's policy path, and repeated market adjustments to rate-cut expectations have triggered frequent style rotations. Investors should remain highly vigilant about geopolitical shocks, global supply chain disruptions, and potential undercurrents in U.S.-China relations. In the short term, capital continues rotating between AI-related companies and traditional sectors. Over the medium term, we expect domestic and international investors to refocus on fundamentals, which should support valuations of high-quality companies with solid underlying performance. (Source: Bloomberg, Ping An Asset Management (Hong Kong) Company Limited)

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