Global Stock Market Weekly Summary
Week 25 was defined by shifting monetary policy expectations in the West and a geopolitical whiplash in the Middle East. Newly appointed Federal Reserve Chairman Kevin Warsh navigated his first FOMC meeting, holding rates steady at 3.50%–3.75% but delivering a distinctly hawkish signal: nine of twelve dot-plot participants now project at least one rate hike by year-end. Warsh also announced sweeping task forces to overhaul the Fed's forecasting and communication operations. Naturally, we are aware that rising interest rates can have a negative effect on equities. As rates climb, bonds become more attractive due to higher yields, effectively creating stiffer competition for capital that would otherwise flow into stocks.
Simultaneously, markets experienced massive volatility regarding the Iran-U.S. conflict. An interim 14-point peace deal signed on Wednesday sparked a crash in oil prices and a brief market rally. However, the euphoria was short-lived; by Friday, Iran closed the Strait of Hormuz again, citing ceasefire violations, which sent oil prices higher and reignited geopolitical uncertainty. Entering the weekend, global markets are looking toward a massive potential tailwind: Today marks the start of emergency U.S.–Iran peace talks in Switzerland led by Vice President JD Vance. A successful resolution would effectively fully reopen the Strait, bringing much-needed relief to global energy markets and easing the very supply-chain and inflationary pressures the Fed has been battling.
Portfolio Update: The Long-Term Vision on Hong Kong Equities
Within our own Nobel Select virtual portfolio, the spotlight this week fell heavily on our Hong Kong and Chinese tech allocations, specifically Alibaba (BABA) and Tencent (TCEHY). Frankly, their recent price action has been frustrating. Both stocks have acted as laggards in our depot, performing poorly despite a continuous stream of overwhelmingly positive fundamental news.
Alibaba, in particular, had a stellar week on the operational front. The company unveiled its first suite of AI models specifically designed for robotics, a major milestone in embodied AI. Furthermore, Chairman Joe Tsai gave a high-profile Bloomberg interview at VivaTech 2026, delivering a highly convincing narrative about Alibaba's dominance in China’s AI landscape and how deeply artificial intelligence is already integrated into their core business model. From our perspective this was an incredibly positive week for the company's intrinsic value. Yet, the broader stock market completely ignored these developments, choosing instead to focus on short-term macroeconomic noise.
This disconnect is exactly why we maintain a strict, long-term investment philosophy. Short-term market volatility and shifting sentiment do not dictate our strategy. While rising US interest rates create a headwind for Western equities, Hong Kong operates in a different monetary and economic environment. The PBOC's easing bias contrasts sharply with the Fed's hawkish tilt, providing a meaningful structural cushion for Chinese equities that external US factors simply do not affect to the same degree.
What truly matters to us is cash flow. Both Alibaba and Tencent possess incredibly strong, highly resilient cash flows. While they are currently directing significant capital toward future AI infrastructure spending, the underlying cash generation remains massive. Ultimately, unless the core fundamentals of these businesses drastically change, these future cash flows must inevitably drive the stock prices higher—regardless of how pessimistic short-term investors might feel right now. We remain steadfast in our thesis. We have no intention of altering our vision and will look toward the upcoming earnings reports in August (Alibaba's Q1 FY2027 and Tencent's Half-Year 2026). Unless there is an extremely bad report hidden in those numbers, we believe these companies remain heavily undervalued.
On a brighter note within the portfolio, Eli Lilly (LLY) continues to be a standout performer. Trading around $1,099 (up nearly 21% from our cost basis), the company's obesity drug franchise remains on a strong trajectory with expanded PBM coverage supporting volume growth.
Europe, Asia-Pacific, and US Markets
Global markets presented a study in contrasts this week. In the US, the Dow eked out a fractional gain near 52,000, while the S&P 500 slipped roughly 1% and the Nasdaq fell 2.5% amid a rotation out of growth stocks and into energy and industrials. SpaceX (SPCX) continued its post-IPO rally, drawing institutional capital away from established tech names.
European equities navigated a mixed week, caught between the hawkish tone of the US Fed and the optimistic prospect of falling energy prices. The STOXX 600 briefly hit a record high mid-week before pulling back to finish roughly flat, while the German 10-year bund yield pushed above 2.8%.
The biggest story in the Asia-Pacific region was Japan. The Bank of Japan raised its policy rate to 1.00%—the highest level since 1995. The Nikkei 225 responded by surging past 70,000 for the first time in history before consolidating above 69,000. Meanwhile, broader Asian markets outside of Japan were relatively muted, with the Hang Seng dragged down by the ongoing, frustrating sell-off in Chinese tech giants.
Week 26 Outlook
As we transition into Week 26, the market's focus will pivot from central bank rhetoric back to hard economic data and geopolitical realities. The outcome of Sunday's Iran-US peace talks will likely set the tone for the entire week. A formal agreement to secure the Strait of Hormuz could trigger a sharp drop in energy prices, prompting a powerful relief rally in equities and a potential recalibration of inflation expectations.
Key Events to Watch
- Sunday, June 21: U.S.–Iran Emergency Talks. Vice President Vance leads negotiations in Switzerland. The market will react immediately on Monday to any headlines. A confirmed peace agreement to secure the Strait is the primary geopolitical catalyst to watch.
- Tuesday, June 23: S&P Global Flash US PMIs: The first real-time read on June's business activity.
- Wednesday, June 24: New Home Sales & Durable Goods Orders. These data points will help clarify whether the U.S. economy is slowing or if the "no landing" scenario persists.
- Thursday, June 25: May PCE Price Index. The Fed's preferred inflation gauge (consensus core PCE ~3.3%). After Chairman Warsh's firm stance this past week, investors will be hypersensitive to any signs that inflation is remaining stickier than expected, which could cement the case for a rate hike.
- SpaceX (SPCX) Rebalancing: As SpaceX enters its full second week of trading, index fund rebalancing and institutional portfolio adjustments could introduce continued high volume and volatility, acting as a risk factor for capital allocation across the broader tech sector.
Bottom line: The macro environment remains complex, with rising bond yields offering stiff competition for stocks and geopolitical risks looming. However, our portfolio is built for the long term. By focusing on companies with fortress balance sheets, massive cash flows, and clear technological leadership in AI, we are perfectly positioned to weather this short-term volatility. We look forward to August's earnings season to vindicate our patience.