Brian Tycangco, editor at Stansberry Research, commented:
“Some news circulating BYD has started cutting production by reducing night time shifts at some of its plants as per Reuters. I’d take that with a grain of salt given the past week’s strong insurance registration numbers for the brand.”
Iran-Israel Ceasefire Triggers Market Rebound
US airstrikes on key Iranian nuclear sites pushed Iran and Israel to agree to end airstrikes on June 24, driving demand for risk assets. Hong Kong and Mainland markets reacted to the news, as the ceasefire removed the threat of oil supply disruption. The truce also raised hopes of a US-Iran nuclear agreement, potentially restoring stability in the Middle East.
Fed Chair Powell and US Data Raise Fed Rate Cut Expectations
Fed Chair Powell delivered two days of testimony on Capitol Hill, signaling a wait-and-see policy stance to assess the impact of tariffs on inflation. However, soft US economic data and Fed speakers fueled speculation about a Q3 Fed rate cut, lifting market sentiment.
Several Fed speakers, including Michele Bowman, Austan Goolsbee, Mary Daly, and Susan Collins, signaled support for policy easing. US GDP numbers for Q1 potentially pressured Fed speakers into a more dovish stance as President Trump clamored for rate cuts. The US economy shrank by 0.5% quarter-on-quarter in Q1 after expanding 2.4% in Q4 2025.
China Industrial Profits Plunge as US Tariffs Bite
Industrial profit numbers from China spooked investors on June 27, overshadowing easing Middle East tensions. Year-to-date, industrial profits fell 1.1% year-on-year (YoY) in May after rising 3% in April. Significantly, profits tumbled 9.1% in May YoY, reflecting the early effect of tariffs on China’s firms. The mining sector took the biggest hit, with profits down 29% YoY in May.
Natixis Asia Pacific Chief Economist Alicia Garcia Herrero remarked on the May data, stating:
“Cost of over-competition – but also US tariffs – clearly hurting Chinese companies. Corporate profits fell 9.1% in May. Unsustainable without additional subsidies.”
Key Levels to Watch: 24,000 Support or a 25,000 Test
The Iran-Israel ceasefire and rising expectations of a Fed rate cut pushed the Index above the crucial 24,000 resistance level. Significantly, the Index avoided a drop below the 50-day Exponential Moving Average (EMA), affirming bullish price trends.
Favorable details of a US-China trade deal, easing Middle East friction, and upbeat data from China could send the Hang Seng Index above the June high of 24,533. A sustained move through 24,533 could pave the way toward the March high of 24,874 and potentially 25,000.
Conversely, weak China data, a one-sided trade deal, and renewed Middle East tensions could drag the Index below 24,000. Sustained selling pressure may enable the bears to target the 50-day EMA, a crucial support level.
