Macro Wrap

Geopolitical risks remain elevated as the US–Iran conflict enters its 100th day with no visible breakthrough. Iran launched fresh missile barrages toward Israel and warned against further military action in Lebanon, further straining the fragile regional truce. Reports suggest Donald Trump urged Israel to avoid retaliatory escalation in Beirut while pressing Iran to resume negotiations, although Israel subsequently responded with ballistic strikes targeting central Tehran. Despite continued backchannel communication through mediators, progress on key sticking points—including the Strait of Hormuz, frozen Iranian assets, and the Lebanon conflict—remains limited, keeping regional uncertainty elevated.

Global markets turned sharply risk-off on Friday, June 5, after a strong US labour market report reinforced expectations that the Federal Reserve may keep rates higher for longer. The Nasdaq 100 plunged 4.8%, marking its sharpest daily decline since the April 2025 “Liberation Day” tariff shock, while the broader tech-led selloff erased nearly USD1.8trn in S&P 500 market capitalization.

US May non-farm payrolls rose 172k, well above market expectations of 88k, while April payrolls were revised sharply higher to 179k. Combined revisions added 93k jobs over the prior two months, lifting the three-month average to 188k and reinforcing resilience in the US economy. Hiring strength was concentrated in leisure & hospitality and local government sectors, partly linked to infrastructure and World Cup-related activity. Wage growth moderated slightly, with average hourly earnings rising 3.4% YoY, while the unemployment rate held steady at 4.3%.

Markets are also closely monitoring a major AI-linked IPO expected to price this week, targeting a valuation near USD1.75trn and raising roughly USD75bn. The listing could become a key gauge of whether investor enthusiasm toward AI assets remains sustainable or is approaching speculative extremes.

Data watch : This week, investors will focus on US CPI, the ECB meeting on Thursday, and China's inflation data and trade figures.