Global Stock Market Weekly Summary
Week 26 was defined by two forces pulling in opposite directions: a Federal Reserve that pivoted aggressively hawkish under new Chair Kevin Warsh, and an AI and geopolitical shock that drove Chinese tech equities to fresh 52-week lows. The S&P 500 closed modestly lower as the May PCE inflation report reignited rate-hike fears, while the Hang Seng Tech Index suffered its worst week in over a year. Against this backdrop, we added to our gold and silver miners exposure on weakness, and we remain steadfast in our Alibaba (BABA) and Tencent (0700.HK) positions. The May PCE print on Thursday June 25, with headline inflation at 4.1% year-over-year and core at 3.4%, pushed the probability of a September rate hike to roughly 80% per CME FedWatch and drove DXY to a 52-week high of 101.80. With lower oil prices there's a potential disinflation path for the second half of 2026, while skirmishes between Iran and the US over the weekend leave us in the unclear how long and if the peace deal will hold.
Week 26 Recap
US equities were choppy but resilient. The S&P 500 ended the week down roughly 1.5%, and the Nasdaq Composite gave back about 2%. Treasury yields initially backed up on the hot PCE, with the 2-year touching 4.24% intraweek, before retracing to 4.07% Friday as the Iran ceasefire unwound energy-driven inflation expectations. The 10-year closed at 4.38%. China tech was the genuine pain trade. The Hang Seng Index fell 5.2% for its worst week since April 2025, and the Hang Seng Tech Index dropped roughly 7.7%. KWEB finished near 52-week lows.
Alibaba (BABA): Pentagon Lawsuit and AI Distillation Allegations
Alibaba's ADR closed Friday at $94.81, down roughly 11.4% for the week, after touching a fresh 52-week low of $91.99 intraday. The Hong Kong line (9988.HK) was even weaker, closing at HK$89.50 for a weekly loss of about 15.1%. The catalysts were largely company-specific. On June 23, Alibaba filed a federal lawsuit seeking removal from the Pentagon's Chinese Military Companies List, which carries a June 30 compliance deadline that will force certain index-tracking and institutional US investors to divest. A day later, CNBC reported that Anthropic had sent a letter to US officials accusing Alibaba of running a "distillation campaign" to extract Claude's capabilities. Both headlines compounded existing pressure from the May 13 fiscal-year results, which showed revenue growth of just 3% year-over-year. Through the sell-off, Alibaba continued executing its share repurchase program, with Form 6-K filings on June 23 through June 26 confirming ongoing buybacks. Analyst consensus remains firmly Buy, with average price targets clustering around $173 to $196 across MarketBeat, Benzinga, and CNN, implying roughly 85% to 105% upside from current levels. We do not expect more lucrative buying opportunities than current levels in the near future.
Tencent (0700.HK): Quiet Consolidation at the Lows
Tencent closed Friday at HK$411.80, down 6.41% for the week, matching its 52-week low. The broader China tech rout drove most of the move, but Tencent had its own catalyst mix. On Monday June 22, CNBC reported that Tencent had begun testing Xiaowei, a native AI assistant embedded inside Weixin that can call mini-programs and message friends on behalf of its 1.4 billion user base. The same week, Bloomberg reported Tencent was negotiating exits from several Japanese game studios including Marvelous and PlatinumGames, redirecting capital toward Hunyuan AI development. Tencent continued its daily repurchase cadence, buying back 1.186 million shares for HK$500.7 million on June 25 alone, consistent with the roughly HK$500 million daily pace it has maintained throughout 2026. Analyst consensus at Morgan Stanley, Goldman Sachs, UBS, and Barclays holds Buy ratings with average price targets near HK$700 to HK$722, implying approximately 70% upside. We are holding Tencent and are also potentially increasing the position if the negative price action continues. The combination of WeChat AI monetization optionality, daily buyback discipline, and a reasonable valuation makes this an attractive buy price.
Gold and Silver Miners: Adding on Weakness
The precious metals complex came under pressure as the hawkish Fed repricing and a surging dollar pushed real yields higher. Spot gold closed Friday at $4,087 per ounce, down about 1% on the week but holding the $4,000 support level. Silver was the harder hit, closing at $58.78 per ounce for a weekly decline near 12% as the gold-to-silver ratio expanded from 63 to roughly 70. Both our iShares Gold Producers UCITS ETF (IAUP.L) and our iShares MSCI Global Silver and Metals Miners ETF (SLVP) declined sharply alongside the broader complex, with gold producers registering a technical death cross on Friday as the 50-day moving average crossed below the 200-day on the widely followed US-listed gold miners benchmark. We added to our IAUP.L and SLVP positions during the week. The structural case remains intact. The PBOC has now extended its gold buying streak to 18 consecutive months even as prices pulled back from January's $5,594 peak, and global gold ETFs saw their largest weekly inflow since April after a $7.6 billion exodus. Newmont (NEM), Agnico Eagle (AEM), and Wheaton Precious Metals (WPM), which anchor the largest weightings inside IAUP.L, continue to generate record free cash flow at these metal prices, and central bank demand is tracking 800 to 850 tonnes for 2026. We view the technical damage as a near-term issue against a multi-quarter bullish setup.
China Macro and Geopolitical Backdrop
Premier Li Qiang used his Summer Davos keynote on June 24 to pitch "China Opportunity 2.0" and push back against the China Shock 2.0 narrative, but the underlying data did not cooperate. May retail sales contracted 0.6% year-over-year, the first decline since December 2022, and 618 shopping festival GMV was essentially flat at roughly RMB 863.6 billion with e-commerce growth of just 0.9%. May new home prices fell 0.2% month-over-month and 3.5% year-over-year, with tier-1 divergence persisting (Shanghai up 3.2% YoY, Shenzhen down 4.5%). The PBOC held the 1-year LPR at 3.00% and the 5-year LPR at 3.50% for a 13th consecutive month. On the AI front, the week saw a remarkable cluster of Chinese open-weight model releases including Zhipu's GLM-5.2 (744 billion parameters, 1 million token context), Moonshot's Kimi K2.7 Code, and MiniMax M3. Alibaba's Qwen team released Qwen-AgentWorld and the Qwen-Robot Suite on June 22. These releases reinforce our thesis that the China AI ecosystem is reaching frontier parity, even as the June 1 Commerce Department guidance extended the US chip ban to Chinese firms operating outside China.
Week 27 Outlook
Week 27 is compressed by the July 4 holiday, with US markets shut entirely on Friday July 3. The data calendar is front-loaded. The May PCE print has already reset the hiking narrative, and any upside surprise in payrolls or ISM would push the September hike probability even higher. For our portfolio, the focus is on China June PMI on June 30, the June nonfarm payrolls on July 2, and the Pentagon blacklist compliance deadline on June 30, which could potentially generate additional passive selling on Alibaba into the start of the week.
Key Events
- Monday, June 29: No major US releases. Fed speakers enter an open window ahead of the July 18 blackout.
- Tuesday, June 30: China NBS Manufacturing PMI for June (consensus near 50.0; a sub-50 print would amplify stimulus pressure). Also Conference Board Consumer Confidence and MNI Chicago PMI from the US. The Pentagon Chinese Military Companies List compliance deadline falls on this day, directly relevant to Alibaba and Baidu flows.
- Wednesday, July 1: ISM Manufacturing PMI for June (consensus 53.7, prior 54.0) plus construction spending.
- Thursday, July 2: June Nonfarm Payrolls released a day early due to the holiday (consensus +110K to +130K versus the +172K May print; unemployment expected 4.2% to 4.3%). Initial jobless claims for the week ending June 27 also release. This is the single most important data point of the week.
- Monday, July 6: USTR public comment period closes on the proposed 12.5% Section 301 tariff on China over forced labor.
- Tuesday, July 7: USTR public hearing on the proposed 12.5% tariff. Expect MOFCOM retaliation rhetoric to intensify.
Four Macro Threads to Watch
First, the Fed reaction function under Chair Warsh is now genuinely two-sided. The June 17 FOMC removed the prior easing bias, the median 2026 dot moved to 3.8% from 3.4% in March, and 9 of 18 participants now anticipate a hike by year-end. Minneapolis Fed President Kashkari publicly flipped to penciling in one hike on June 26. If the Iran peace framework holds and energy drags headline inflation lower into July and August, the case for a hike weakens. If services inflation stays sticky and payrolls remain strong, the hike becomes the base case. Warsh's first Humphrey-Hawkins testimony on July 14 will be a major event for rate expectations.
Second, the US-China trade truce holds through November 10 but is showing strain. The Pentagon blacklist of 188 Chinese firms has a June 30 compliance deadline that will force passive selling on Alibaba into the start of the week. The proposed 12.5% Section 301 forced-labor tariff, with comments closing July 6 and a hearing July 7, is the next concrete policy catalyst. The Section 122 15% global tariff also sunsets on July 24 unless extended, which adds another cliff-edge to monitor in week 28. We do not expect a full truce breakdown before November, but the rhetoric will heat up.
Third, China consumer weakness is approaching a policy response threshold. The first retail sales contraction since 2022, flat 618 festival growth, and continued property price declines are likely to push the PBOC toward an RRR cut or LPR reduction in the third quarter. Premier Li's Summer Davos pledge to expand domestic demand signals political readiness. The PBOC has been running the USD/CNY fix firmer than spot at around 6.82, signaling tolerance for managed gradual yuan softness. A material stimulus announcement would be a positive catalyst for both Alibaba and Tencent into the Q2 earnings season.
Fourth, the AI competitive dynamic continues to favor Alibaba and Tencent strategically. Qwen's agentic releases on June 22, the GLM-5.2 open-weight launch, and the Xiaowei integration into WeChat all reinforce the long-term monetization optionality. The Anthropic distillation accusation is a near-term regulatory risk but does not change our view that the underlying AI capability gap has narrowed materially. We expect Q2 cloud revenue at Alibaba to show accelerating growth, and WeChat AI features to begin contributing to advertising and mini-program GMV by Q4. Tencent's pivot away from Japanese studio investments toward Hunyuan and OpenClaw is the right capital allocation decision.
Positioning Into Week 27
We view current levels as a generational entry point on a 12 to 24 month view for our already quite large positions in Tencent and Alibaba. Should there be another selloff we'd consider short puts, but are just holding the positions for now. The potential technical selling around June 30 may create a brief overshoot to the downside, but the structural fundamental case is intact at both companies. For gold and silver miners, the near-term technical setup is more damaged, but the macro setup is exactly what we want to own miners for: sticky inflation above the Fed's target, a central bank buying regime that has not flinched for 18 months, and discounted miner valuations against record free cash flow generation. Those positions are now final and complete.
We look forward to the June 30 PMI and the July 2 payrolls to clarify the next direction, and to Q2 earnings in August to vindicate our patience on the China internet thesis.