Hong Kong’s Hang Seng index entered bear market territory on Wednesday, with China-exposed stocks weighing the most as weak economic data from the mainland raised more doubts over a reopening-led recovery this year. The Hang Seng index fell 2.5% by the afternoon break to a six-month low of 18,130.00 points, bringing its total losses to 25% from an intraday high of 22,700 points hit in late January. A drop of 20% from recent peaks indicates a bear market. Losses were broad-based barring a few heavyweight firms, and were largely skewed towards stocks with high exposure to China. Game developer Notecase (NASDAQ: NTES) Inc (HK:9999) fell 5.5% and was the worst performer on the Hang Seng, while Chinese property developer Country Garden Holdings (HK:2007) and food delivery app Maiduan (HK:3690) lost 4.7% apiece. Chinese stocks tumbled to six-month lows as data showed the country’s manufacturing sector shrank for a second consecutive month in May, and at a faster pace than the prior month. With the growth in overall business activity also slowing, investors questioned whether a post-COVID reopening recovery in China was running out of steam, given that April had also provided a slew of weak readings. The manufacturing sector is a key growth engine for China but has been struggling with slow local demand despite the lifting of COVID restrictions earlier this year. Slowing overseas demand for Chinese goods, amid worsening global economic conditions, has also weighed heavily on the manufacturing sector. This, coupled with slowing private investment in the country, has led to a reversal in sentiment over an economic recovery this year. The trend also bodes poorly for Hong Kong, given the city’s close economic reliance on the mainland. A bulk of the Hang Seng’s heavyweight listings also consist of Chinese companies. Losses in oil stocks also weighed on the Hang Seng on Wednesday, with majors CNOOC Ltd (HK:0883) and PetroChina Co Ltd (HK:0857) losing 5.2% and 4.5%, respectively. Oil prices tumbled around 4% on Tuesday amid growing concerns over a demand slowdown this year.

The US dollar rebounded sharply in the past week after hawkish comments from US Federal Reserve and still-elevated inflation raised doubts on whether the US central bank will pause at its next meeting in June. The US dollar index (DXY index) jumped 1.4%. The Swedish Krona was the worst-performing currency, plunging 2.1% against the US dollar in the past week followed by the New Zealand down 1.6%, and the Euro sliding 1.5% within the G10 space. Global equity markets slipped on more evidence of weakness in the post-Covid recovery in China, worries regarding the US debt ceiling, and lingering US regional banking concerns. US markets were mostly lower, led by the Dow Jones Industrial Average losing 1.1%. The MSCI All-Country World Index fell 0.5%. The S&P 500 fell 0.3%, while the Nasdaq 100 index rose 0.6%. The German DAX 40 and the UK FTSE 100 dropped 0.3%, and the Hang Seng index declined 2.1%, while Japan’s Nikkei 225 jumped 0.8%. A spate of Fed speeches is scheduled through the coming week, including Fed Chair Jerome Powell on Friday. Recent Fed speak has tilted toward the hawkish side. Fed Governor Michelle Bowman said on Friday the US central bank probably will likely need to raise interest rates further if inflation stays high. This follows remarks from New York Federal Reserve President John Williams on Tuesday that the Fed may not be done raising rates. US CPI and PPI data showed inflationary pressures are subsiding, but probably not fast enough, prompting a repricing in Fed rate expectations. Markets are pricing in a 15% chance of a 25 bps Fed rate hike at the June meeting up from 8% a week ago, according to the CME Fed Watch tool. This follows remarks from New York Federal Reserve President John Williams on Tuesday that the Fed may not be done raising rates. US CPI and PPI data showed inflationary pressures are subsiding, but probably not fast enough, prompting a repricing in Fed rate expectations. Markets are pricing in a 15% chance of a 25 bps Fed rate hike at the June meeting up from 8% a week ago, according to the CME Fed Watch tool.

Meanwhile, US Congressional Budget Office Said On Friday.

the US faces a “significant risk” of defaulting on payment obligations within the first two weeks of June without a debt ceiling increase. A debt limit meeting between US President Joe Biden and top lawmakers that was meant to be on Friday had been postponed to next week. Outside of the US, China’s producer price deflation deepened while consumer prices rose at a slower pace in April. The data is another piece of evidence after last week’s data that showed an unexpected contraction in China’s manufacturing activity, reinforcing the patchy post-Covid economic recovery. Concerns regarding slowing demand in the world’s second-largest economy weighed on Asia ex-Japan and Emerging Market equities, commodity prices, and commodity-sensitive currencies like the Australian dollar and the New Zealand dollar. As the US earnings season draws to a close, the positive drivers for equity markets are dwindling. So far, 92% of the companies in the S&P 500 have reported earnings for the first quarter. Of these 78% have reported actual EPS above estimates, according to FactSet. Key market focus in the coming week includes China industrial output and retail sales data, minutes of the recent Reserve Bank of Australia’s meeting, Germany ZEW sentiment index, UK jobs, and US industrial output and retail sales data are due on Tuesday; Japan GDP and Euro area inflation are due on Wednesday; Australia jobs data on Thursday; Japan inflation on Friday. The British Pound has seen a positive week on the data front but losses against the greenback to end the week has added a bitter taste. 1.2460 holds the key for bullish continuation with UK Employment data in the week ahead. Australian Dollar Outlook: AUD Crunched with US Dollar Back on Top The Australian Dollar collapsed to end last week with the US Dollar finding favor with increasing bets that the Fed will be cutting the target rate later this year. Gold Weekly Forecast: XAU/USD Holds up Amid Sudden Dollar Rally Gold prices eased into the weekend as yesterday’s dollar appreciation gains momentum on surprise inflation statistic. Safe haven demand likely to keep gold afloat. Crude Oil Market Outlook Darkened by Debt Ceiling Debacle and Recession Risks Crude oil prices are likely to remain subdued in the near term, with growing U.S. recession fears and the debt ceiling impasse weighing on market sentiment and risk appetite.

Nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum.

Sed ut perspiciatis unde omnis iste natus error sit voluptatem accusantium doloremque laudantium, totam rem aperiam, eaque ipsa quae ab illo inventore veritatis et quasi architecto beatae vitae dicta sunt explicabo.

Neque porro quisquam est, qui dolorem ipsum quia dolor sit amet, consectetur, adipisci velit, sed quia non numquam eius modi tempora incidunt ut labore et dolore magnam aliquam quaerat voluptatem. Ut enim ad minima veniam, quis nostrum exercitationem ullam corporis suscipit laboriosam, nisi ut aliquid ex ea commodi consequatur.

At vero eos et accusamus et iusto odio dignissimos ducimus qui blanditiis praesentium voluptatum deleniti atque corrupti quos dolores et quas molestias excepturi sint occaecati cupiditate non provident, similique sunt in culpa qui officia deserunt mollitia animi, id est laborum et dolorum fuga.

“Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat”

Quis autem vel eum iure reprehenderit qui in ea voluptate velit esse quam nihil molestiae consequatur, vel illum qui dolorem eum fugiat quo voluptas nulla pariatur.

Temporibus autem quibusdam et aut officiis debitis aut rerum necessitatibus saepe eveniet ut et voluptates repudiandae sint et molestiae non recusandae. Itaque earum rerum hic tenetur a sapiente delectus, ut aut reiciendis voluptatibus maiores alias consequatur aut perferendis doloribus asperiores repellat.

Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat.

Nemo enim ipsam voluptatem quia voluptas sit aspernatur aut odit aut fugit, sed quia consequuntur magni dolores eos qui ratione voluptatem sequi nesciunt.

Et harum quidem rerum facilis est et expedita distinctio. Nam libero tempore, cum soluta nobis est eligendi optio cumque nihil impedit quo minus id quod maxime placeat facere possimus, omnis voluptas assumenda est, omnis dolor repellendus.