Market Navigator: Peace deal and US PCE in focus – week of 22 Jun 2026

Last week's recap: Strait of Hormuz tensions, hawkish Fed repricing and China data miss

• Strait uncertainty clouds peace deal: Just days after the US-Iran preliminary peace agreement, Iran's Revolutionary Guard declared the Strait of Hormuz closed ahead of bilateral talks in Switzerland. Washington disputed the closure, reporting 55 merchant vessels transited on 20 June. Whether a transit toll applies after the 60-day period remains unresolved. Crude oil recovered late in the week but still fell approximately 8%.
• FOMC delivers hawkish surprise: The Federal Reserve (Fed) held rates at 3.50–3.75% in Kevin Warsh's first meeting as chair, but the dot plot turned hawkish: nine of 18 officials project at least one hike by year-end, with six expecting two or more. The statement dropped its easing bias, lifting bonds futures hike pricing to 90% from 60%; the two-year Treasury yield rose to 4.179%.
• BoJ hikes while BoE and RBA hold: The Bank of Japan (BoJ) raised its policy rate to 1.0% in a 7-1 vote, the highest since 1995, citing Iran war-driven inflation risks. The Bank of England (BoE) held at 3.75% on a 7-2 vote, with two members favouring an immediate hike. The Reserve Bank of Australia (RBA) paused at 4.35% to assess the lagged impact of three consecutive hikes.
• Accelerating deterioration in China: China's May activity data disappointed across the board. Fixed-asset investment contracted 4.1% against a 2% forecast, while retail sales fell for the first time since December 2022. Industrial production improved to 4.5% year-on-year (YoY), but manufacturing strength cannot offset persistent weakness in domestic demand. New-home prices extended their decline to 35 consecutive months, undermining the consumer confidence needed to support a durable recovery.

Markets in focus: US rallies as Hang Seng slides and yen depreciates to July 2024 lows

Western Digital and Moderna surge as Intel–Apple partnership lifts Nasdaq 100

US equities closed higher for the week, with the Nasdaq 100 leading gains at 2.6%, followed by the S&P 500 at 0.9% and the Dow Jones at 0.7%. Thursday's semiconductor rally — sparked by an announced partnership between Intel and Apple — offset the headwind from the hawkish FOMC outcome earlier in the week.

Western Digital was the S&P 500's best performer, surging 32.6% after Morgan Stanley published a bullish report concluding that a global hard disk drive (HDD) shortage will persist through at least 2028, with artificial intelligence (AI) data centre demand growing 40–50% annually against supply expansion of only 30–35%. A wave of share price target upgrades from Wall Street amplified the move. Moderna gained 28.2% after the Food and Drug Administration's (FDA's) advisory panel voted unanimously 9-0 in favour of its mRNA flu vaccine mFlusiva, opening a major new revenue stream beyond its COVID franchise.

Accenture fell 24.8% in its worst weekly decline on record. Markets reacted negatively to a 2% decline in new bookings and the announcement of US$4.17 billion in cybersecurity acquisitions — a sector increasingly viewed as vulnerable to AI disruption. The newly listed SpaceX surged to a record US$225.6 on 16 June, before closing the week at US$185 as investors digested the company's announced debt issuance and its US$60 billion option to acquire AI coding start-up Cursor.

The US Tech 100 index has almost fully recovered from its early June correction and appears poised to re-challenge the historic peak at 30,759. The 20-day moving average (MA) will provide support for any pullback at 29,865.

Figure 1: US Tech 100 index daily price chart

Hang Seng Index posts worst week since the outbreak of the US-Iran war

The Hang Seng Index (HSI) fell 3.2% last week — its worst weekly decline since March, when the US-Iran conflict erupted — closing below the 24,000 psychological level for the first time since July 2025.

Losses were broad-based, driven by a confluence of Strait of Hormuz developments, deteriorating China macroeconomic data, and hawkish Fed repricing. Energy shares bore the brunt of early selling as oil and aluminium prices plunged on signals of strait reopening, with PetroChina declining 11.3% and Aluminum Corporation of China falling 17.2%. Property developers faced dual headwinds from weaker May home price data and higher-for-longer US interest rates — amplified via the Hong Kong dollar peg — sending Longfor down 19.8% and China Overseas Land & Investment 13.6% lower.

Against the broader trend, select technology names outperformed as domestic AI demand supported sentiment, with Sunny Optical gaining 12.0%, SMIC advancing 6.8% and Lenovo rising 6.5%.

Technical momentum deteriorated further as the HSI tested a new local trough at 23,750 — equivalent to the 61.8% Fibonacci extension of the decline between 1 and 11 June. Failure to hold this level would open the door to the next psychological support at 23,000, with meaningful technical support unlikely to emerge until the 22,500–22,700 zone. Any recovery attempt will encounter resistance from the local peak near 25,000.

Figure 2: Hang Seng Index daily price chart

USD/JPY tests July 2024 highs despite BoJ's rate hike

Speculative pressure on the yen intensified in the week ending 9 June, with non-commercial positions — aggregating asset managers and leveraged funds — rising 12.2% week-on-week to US$11.37 billion net short, based on LSEG calculations of Commodity Futures Trading Commission (CFTC) futures data. The BoJ delivered a widely expected 25-basis-point hike to 1.0% on 16 June with Deputy Governor Himino citing inflation deviating above the 2% target and diminishing downside risks to growth. The central bank also announced a halt to Japanese government bond (JGB) tapering from April 2027 to stabilise the JGB market and preserve room for future hikes.

Despite the rate hike, the yen failed to recover. With the increase fully priced in and no clear timeline for subsequent moves, hawkish Fed repricing widened the US-Japan two-year yield differential further, pushing USD/JPY to 161.8 — its highest since July 2024.

Japan's May consumer price index (CPI) data showed core inflation — excluding fresh food but retaining energy — holding at 1.4% year-on-year (YoY), while core-core slowed to 1.8% from 1.9%, with government fuel subsidies masking building pipeline pressure.

USD/JPY maintains its bullish structure above the 200-day MA. The 160 level had capped advances since March, with official intervention threats a key constraint. However, with no actual intervention since early May, the pair is breaking above this threshold. Should momentum above 161.8 hold, the next resistance lies near 165 at the ascending channel's upper boundary. On the downside, 160 provides immediate support, coinciding with the 20-day MA; a breach would target 156, near the 200-day MA.

Figure 3: USD/JPY daily price chart

Week ahead: Australia CPI, US PCE and Micron's US$35bn quarter put bulls to the test

Australia's monthly CPI for May dominates the Asian session on Wednesday, with the previous reading at 4.2% YoY. The key question is whether the April moderation from 4.6% marks a genuine inflection or merely a temporary reprieve. With the RBA having delivered three consecutive 25-basis-point hikes — lifting the cash rate to 4.35% — and the May budget's proposed overhaul of the capital gains tax (CGT) discount expected to weigh on property investment sentiment, there are emerging reasons to anticipate gradual disinflation. However, second-order effects from elevated energy costs and persistent services inflation suggest the path lower may be uneven. A renewed acceleration would raise the probability of a further RBA hike this year, currently priced at 51%.

On Thursday, the Fed's preferred inflation gauge — the core personal consumption expenditures (PCE) price index — is forecast to rise 0.3% month-on-month (MoM) in May, accelerating from April's 0.2% reading. With headline CPI already running at 4.2% YoY — its highest since April 2023 — and core CPI at 2.9% YoY, any upside surprise would reinforce the hawkish wing of Fed already divided on the rate path, further fuelling the US dollar while putting pressure on US equities and bonds.

On the corporate front, Micron reports fiscal third-quarter results on Wednesday. Analysts now expect record revenue of US$35.4 billion according to LSEG — implying approximately 281% YoY growth against Q3 fiscal 2025's US$9.3 billion, and well above the company's own guidance midpoint of US$33.5 billion. The bar is exceptionally high. Investors will scrutinise whether AI-driven demand for high-bandwidth memory (HBM) can sustain the trajectory, and whether management guidance for the fourth quarter signals any deceleration.

Figure 4: Australia inflation rate vs. unemployment and cash rate

Key macro events this week: Global PMI, US and Australia inflation data

(All times in GMT+8)

Tuesday 23 June 2026

• 3.30pm — Euro area S&P Global manufacturing PMI flash (June): previous 51.6, consensus 51.2
• 3.30pm — Euro area S&P Global services PMI flash (June): previous 47.7, consensus 48.1
• 4.30pm — UK S&P Global manufacturing PMI flash (June): previous 53.9, consensus 53.6
• 4.30pm — UK S&P Global services PMI flash (June): previous 49.3, consensus 50
• China foreign direct investment YoY (year-to-date May): previous: -10.3%

Wednesday 24 June 2026

• 9.30am — Australia inflation rate YoY (May): previous: 4.2%, consensus 4.3%
• 9.30am — Australia RBA trimmed mean CPI YoY (May): previous: 3.4%

Thursday 25 June 2026

• 8.30pm — US core PCE price index MoM (May): previous 0.2%, consensus 0.3%
• 8.30pm — US durable goods orders MoM (May): previous 7.9%, consensus -4.7%
• 8.30pm — US gross domestic product (GDP) growth rate QoQ final (Q1): previous 0.5%, consensus 1.6%
• 8.30pm — US personal income MoM (May): previous 0%, consensus 0.4%
• 8.30pm — US personal spending MoM (May): previous 0.5%, consensus 0.6%

Key corporate earnings: Micron earnings challenge memory chip hype

(In local exchange time)

Wednesday 24 June 2026

• Micron

_{Source: Trading Economics, Nasdaq, LSEG (as of 21 June 2026)}