Market Navigator: Nasdaq 100 sells off as Fed hike bets surge
8 Jun 2026

Last week's recap: Robust US jobs data, AI rally retreat and Iran conflict escalation

• Labour market powers Fed hike bets: Non-farm payrolls surged 172,000 in May, more than double the consensus, while ADP private payrolls also beat at 122,000. Upward revisions to March and April brought the three-month average to 188,000 — the strongest such period in over two years — with gains broad-based across sectors. Markets now price around a 70% probability of a 25-basis-point Federal Reserve (Fed) hike by December.
• Euro area inflation seals the deal: Headline consumer price index (CPI) rose to 3.2% year-on-year (YoY) in May, up from 3.0% in April and the highest since September 2023. Core inflation also beat expectations at 2.5%, up from 2.2%, reflecting broadening price pressures across services and goods. The print removed any remaining doubt over the European Central Bank's (ECB) June rate hike decision.
• AI rally takes a breather: South Korea's KOSPI plunged as much as 7% on Friday after Broadcom's AI revenue guidance triggered sharp profit-taking across the semiconductor supply chain. The index remains up 94% year-to-date despite the correction. The won's slide towards 1,550 per dollar — last seen in 2009 — adds further pressure as the Bank of Korea's pivot towards tighter policies may trigger sell-off in leveraged equity positions.
• Iran conflict escalates despite talks: Peace efforts hit a fresh impasse as exchanges of strikes between US and Iranian forces strained the ceasefire. In Lebanon, Hezbollah's rejection of the US-brokered truce and Israel's refusal to withdraw further undermined a broader deal, lifting West Texas Intermediate (WTI) crude 4% on the week.

Markets in focus: US tech selloff, Hang Seng weakness and yen may face new rounds of intervention

Nasdaq 100 and S&P 500 retreat as Fed hike bets surge on blowout payrolls

After accumulating approximately 16% gains since 31 March in an almost uninterrupted advance, the S&P 500 suffered its steepest weekly decline since last May, falling 2.6%. Friday's blowout non-farm payrolls data catalysed the selloff, as the surge in Fed rate hike expectations weighed on the stretched valuations of growth stocks. The pullback was concentrated in technology — the Nasdaq 100 fell 4.5%, while the Dow Jones slipped just 0.3%, as investors rotated into value and cyclical sectors.

Despite the sharp moves, a correction of this magnitude following a sustained advance is consistent with healthy market dynamics — corporate fundamentals remain solid. Risks linger, however: forced unwinding of leveraged positions could amplify near-term volatility, while upcoming inflation prints may push bond yields higher, applying additional pressure on growth stock valuations.

Technology's weakness predated Friday. Broadcom's second-quarter results — revenue of US$22.2 billion, up 48% YoY — beat expectations, yet its third-quarter AI semiconductor guidance of US$16 billion missed the US$17.2 billion consensus, sending shares down 13.7% for the week. Even so, US$16 billion would represent over 200% YoY growth — an acceleration in demand. The deeper concern is whether elevated market expectations can continue to be met, particularly given Broadcom's chief executive flagging that Google would diversify its chip suppliers and that rapid AI revenue growth is compressing margins.

Qualcomm and Intel fell 14.0% and 13.5% respectively following Nvidia's announcement at Computex of its RTX Spark chip, co-developed with Microsoft, which directly targets the Windows laptop market both companies had been building towards.

Humana surged 14.6%, helping healthcare outperform. The managed care company reaffirmed its full-year earnings guidance and received a wave of analyst upgrades. The consensus views 2026 as an earnings trough ahead of a Medicare Advantage margin recovery.

After an advance of over 30% since late March, the US Tech 100 index has encountered a material pullback towards immediate support near 28,567. Failure to hold above this level may trigger further declines towards the 38.2% Fibonacci retracement of the up-wave, near 27,750 — a level that also coincides with a 10% correction from the peak of 30,759. As long as the index trades above the 200-day moving average (MA), the medium-term uptrend remains intact, with potential to re-challenge the historic peak.

Figure 1: US Tech 100 index daily price chart

AIA leads Hang Seng decline as capital control fears spread to insurers

The Hang Seng Index fell 0.9% last week, relatively insulated from the global AI selloff but weighed down by a regulatory headwind for Hong Kong's financial sector.

Concerns over cross-border capital controls, which had centred on brokers and banks, spread to insurers after China's securities regulator cracked down on unlicensed offshore brokers on 22 May, prompting banks to tighten scrutiny on mainland account openings. AIA bore the heaviest impact, falling 10.0% on the week, as mainland Chinese visitors purchasing Hong Kong-based insurance policies represent a substantial portion of its new premium income.

Meituan rebounded 8.9% after first-quarter results beat expectations. Operating losses narrowed from RMB 16.1 billion in the fourth quarter of 2025 to RMB 6.5 billion. Management signalled the food delivery subsidy war may be past its peak following regulatory intervention, raising hopes for a return to breakeven in the second quarter.

A weekly close below 25,000 indicates that the technical momentum of the Hang Seng Index remains weak. The index is currently just above support near 24,900; failure to hold could drive it further towards 24,700. The 200-day MA and the local high near 26,050 represent major resistance. A break above that level would allow the index to break out of its sideways trend.

Figure 2: Hang Seng Index daily price chart

USD/JPY breaks back above 160 as record intervention fails to hold

Japan's foreign currency reserves fell by a record US$75.5 billion in May to US$1.09 trillion, the largest monthly decline on record. Foreign securities holdings dropped US$75.6 billion, a figure closely matching the Ministry of Finance's reported ¥11.7 trillion in yen-buying intervention during the month. While the Ministry does not provide a detailed breakdown of foreign reserve securities, economists estimate that roughly 70% consists of US Treasuries. For context, Japan spent ¥15.3 trillion defending the yen across the entirety of 2024, when USD/JPY also tested the 160 level.

The scale of the May operation proved insufficient. USD/JPY rose 0.7%, creeping back above 160 last week despite renewed verbal warnings from Finance Minister Katayama. The market reaction is aligned with our view that yen weakness cannot be sustainably reversed without a credible and sustained shift in monetary policy.

That shift may now be at hand. Bank of Japan (BoJ) Governor Ueda delivered a hawkish pivot on Wednesday, abandoning previous ambiguity on supply shocks and warning the BoJ may no longer look through war-driven inflation if second-round effects take hold. Markets priced a June hike to 1% — a level not seen since 1995 — at approximately 80% probability. A June hike alone is unlikely to reverse the yen's weakening trend. What markets need is a credible commitment to further tightening; without that, intervention amounts to little more than a holding action against a structural trend.

The technical picture remains unfavourable for the yen. USD/JPY is trading well above its 200-day MA, indicating a strong medium-term uptrend. Unless the pair falls below 155.5, the trend is unlikely to reverse. The resistance zone near 160–161 reflects both technical factors and the potential for government intervention, while immediate support can be found near 158.5.

Figure 3: USD/JPY daily price chart

Week ahead: US and China inflation, ECB decision and Oracle earnings

China's trade figures on Tuesday open a week dominated by inflation data and central bank policy.

Exports surged 14.1% YoY in April, well above expectations, as overseas buyers stockpiled goods ahead of anticipated supply disruptions. Whether that momentum holds — or a pullback in front-loaded demand sees growth moderate — will be closely watched. Import figures deserve equal attention: with retail sales rising just 0.2% YoY in April, the weakest reading since December 2022, a further softening would reinforce structural demand concerns and raise pressure on Beijing for more targeted stimulus.

Inflation data from China and the US follow on Wednesday. US headline inflation has already climbed to 3.8% YoY, and economists warn that second-round effects — transport costs, food price pass-through and elevated expectations — typically take months to materialise fully. Strategic oil reserve releases may be dampening rather than eliminating the supply shock, suggesting the peak may not yet be in sight.

Thursday's ECB decision is near-certain: markets price a 99% probability of a 25-basis-point hike to 2.25%. Widely framed as an insurance hike to pre-empt second-round risks, President Lagarde's guidance on the path forward will be the key market-moving element.

Oracle reports on Wednesday amid scrutiny over whether its US$50 billion annual capital expenditure commitment can convert a record backlog into revenue and free cash flow. Adobe follows on Thursday, with its stock down almost 30% this year as investors weigh whether generative AI rivals are structurally undermining demand for its core products.

Figure 4: Euro zone inflation, unemployment and policy rates

Key macro events this week: China and US inflation alongside ECB rate decision

(All times in GMT+8)

Tuesday 9 June 2026

• 8.30am — Australia Westpac consumer confidence change (June): previous 3.5%
• 9.30am — Australia NAB business confidence (May): previous -24
• 11.00am — China balance of trade (May): previous $84.82 billion, consensus $91.5 billion
• 11.00am — China exports YoY (May): previous 14.1%, consensus 14.3%
• 11.00am — China imports YoY (May): previous 25.3%, consensus 25%
• 10.00pm — US existing home sales (May): previous 4.02 million, consensus 4.05 million

Wednesday 10 June 2026

• 9.30am — China inflation rate YoY (May): previous 1.2%, consensus 1.3%
• 9.30am — China producer price index (PPI) YoY (May): previous 2.8%, consensus 3.8%
• 8.30pm — US core inflation rate MoM (May): previous 0.4%, consensus 0.3%
• 8.30pm — US core inflation rate YoY (May): previous 2.8%, consensus 2.9%
• 8.30pm — US inflation rate MoM (May): previous 0.6%, consensus 0.5%
• 8.30pm — US inflation rate YoY (May): previous 3.8%, consensus 4.2%

Thursday 11 June 2026

• 8.15pm — Euro area ECB deposit rate decision: previous 2%, consensus 2.25%
• 8.30pm — US PPI MoM (May): previous 1.4%, consensus 0.8%
• 8.45pm — Euro area ECB press conference

Friday 12 June 2026

• 2.00pm — UK GDP MoM (April): previous 0.3%, consensus -0.1%
• 10.00pm — US Michigan consumer sentiment preliminary (June): previous 44.8, consensus 46

Key corporate earnings: Oracle and Adobe under scrutiny

(In local exchange time)

Wednesday 10 June 2026

• Oracle

Thursday 11 June 2026

• Adobe

_{Source: Trading Economics, Nasdaq, LSEG (as of 7 June 2026)}