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South Korean stocks continue rally

South Korean stocks extended their rally on Thursday, with the Kospi reaching a ten-month high. Meanwhile, mixed data from China and the US weighed on broader sentiment across Asia-Pacific markets. US equities ended Wednesday’s session with mixed results, as disappointing employment data and a contraction in the services sector raised concerns about the economic outlook. European stocks are poised to open higher on Thursday as markets anticipate a 25-basis-point interest rate cut by the European Central Bank (ECB), which would lower its deposit facility rate to 2%. Gold prices moved little midweek, trading around USD 3360 per ounce, while bitcoin slipped 0.6%, trading near USD 104,700, while US Treasury yields were stable, with the 10-year yield at 4.4% and the 2-year yield holding at 3.9%.

  • Date
  • Author Shane Strowmatt, LGT
  • Reading time 5 minutes

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South Korean equities extended gains on Thursday, with the Kospi climbing 1.3% and reaching its highest level in over ten months, supported by optimism over President Lee Jae-myung’s anticipated economic reforms. These reforms, including a potential second extra budget in July, could boost domestic demand and drive further market growth. Meanwhile, Asia-Pacific markets saw mixed performance as concerns over weak US private sector hiring weighed on sentiment, while tech stocks across the region continued their recent rally. Japan’s Nikkei 225 was down 0.5%, while Australia’s S&P/ASX 200 was trading essentially flat.

China's services growth accelerates in May

China's services sector expanded slightly faster in May, with the Caixin/S&P Global services PMI rising to 51.1 from 50.7 in April, indicating modest growth. New domestic orders increased, but export orders declined due to uncertainty surrounding US tariffs. Weaker manufacturing activity and external trade uncertainties continue to weigh on the broader economic outlook for China. Mainland China’s CSI 300 edged up 0.1%, while Hong Kong’s Hang Seng Index gained 0.7% on Thursday.

US stock indices mixed amid economic concerns

US stock markets closed with mixed results on Wednesday. The Dow Jones Industrial fell by 0.2% to 42,427.74 points, while the S&P 500 edged up by 0.01%, closing at 5970.81 points. The Nasdaq 100 gained 0.3% to 21,721.92 points, driven by strong performance in semiconductor stocks. Weaker-than-expected US employment data for May and a contraction in the ISM services index weighed on sentiment, while inflation concerns are expected to keep the Federal Reserve cautious on rate cuts.

US private payroll growth slows sharply

Private employers in the US added just 37,000 jobs in May, marking the smallest increase in over two years, according to data released on Wednesday by the ADP National Employment Report. This follows a downwardly revised gain of 60,000 jobs in April and reflects a steady decline in private-sector hiring since December. The services sector accounted for nearly all the new jobs, while goods-producing industries saw job losses. In other US macroeconomic data, the US services sector unexpectedly contracted in May, with the ISM nonmanufacturing PMI falling to 49.9, its lowest level since June 2024, from 51.6 in April. Businesses faced higher input costs due to supply chain bottlenecks and tariffs, driving inflation concerns as the survey's prices paid index surged to 68.7, the highest since November 2022.

Bank of Canada holds policy rate steady

The Bank of Canada maintained its policy rate at 2.75% on Wednesday, citing ongoing uncertainty around US trade policies and mixed domestic economic signals. While first-quarter GDP growth exceeded expectations at 2.2%, the labour market weakened, and housing activity contracted. Inflation eased to 1.7% in April due to the removal of a federal carbon tax, although underlying inflation pressures remain elevated. The Bank highlighted the risks from US tariffs, their impact on Canadian exports, and inflationary pressures, signalling a cautious approach to future policy adjustments.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Broadcom. Annual general meetings at Netflix, PayPal, Salesforce, Walmart, and Xiaomi.

Economic data in focus: Swiss unemployment rate (07:45), euro-area PPI (11:00), European Central Bank interest rate decision (14:15), US weekly initial jobless claims

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