US-Iran ceasefire, PCE inflation report, Q1 earnings season nearing end, markets closed Monday.

Economic Data and Financial Events Overview

Key Economic Indicators

The U.S. will release its April Personal Consumption Expenditures (PCE) report, a favored inflation measure by the Federal Reserve, on May 28 at 20:30 Beijing time. Meanwhile, China's official manufacturing PMI for May is also expected soon.

The market anticipates that the PCE index may show upward risks due to higher-than-expected CPI and PPI data for the month. This has led to growing concerns about inflation impacting expectations for central bank interest rates, with futures markets now pricing in the possibility of a rate hike by the Fed later this year.

Earnings Reports

As the Q1 earnings season nears its end, several major companies are set to report their results. In Hong Kong, Xiaomi, Pinduoduo, Kuaishou, Xpeng, and Li Auto will release their Q1 earnings. In the U.S., companies like Marvell and Salesforce are also expected to announce their results.

Over 90% of S&P 500 companies have reported earnings, with a projected year-on-year increase of 29% in Q1 profits. Key retail companies, including Costco and Best Buy, will also report soon, with investors keen to see if high oil prices are affecting consumer spending.

Geopolitical Developments

Former President Trump announced that a peace agreement between the U.S. and Iran is nearly finalized, which includes the reopening of the Strait of Hormuz. This development has reignited hopes for an end to the conflict that has disrupted global energy markets and contributed to high inflation in the U.S.

Federal Reserve Insights

Recent comments from Fed officials indicate a shift towards a more hawkish stance, with rising inflation and long-term Treasury yields leading many investors to believe that the Fed may raise rates instead of cutting them. Notably, Fed Governor Waller emphasized that the next policy statement should indicate that the likelihood of rate cuts is not greater than that of hikes.

MSCI Index Adjustments

On May 29, MSCI will implement significant adjustments to its global standard indices, including the inclusion of 22 stocks and the removal of 24 from the MSCI China Index. This adjustment reflects a shift in global capital pricing logic towards China's industrial upgrades, favoring hard technology sectors.

Upcoming Market Events

Investors should watch for the release of the U.S. consumer confidence index and the Dallas Fed business activity index on May 25. Additionally, several companies, including Xiaomi and Miniso, will report earnings, while new stocks will begin trading.