Market developments
Equities: Global equity markets ended the week sharply lower after a strong run, with a broad AI-driven tech selloff and a hotter-than-expected US jobs report combining to derail what had been a historic winning streak. The selloff was global in scope: the MSCI Asia Pacific Index dropped roughly 1.3% for the week, with South Korea’s Kospi tumbling over 5% on Friday as chipmakers Samsung and SK Hynix led losses following a disappointing AI chip outlook from Broadcom.
Fixed Income: Government bond markets sold off across the board. The May U.S. payrolls report, which topped all forecasts, cemented expectations that the Federal Reserve’s next move will be a rate hike rather than a cut. Interest-rate swaps fully priced in a 25 basis point increase by December, with roughly a 60% probability assigned to an October move, pushing the 10-year Treasury yield back toward 4.5%.
Commodities: Commodity markets were volatile, shaped by the ongoing US-Iran conflict and its implications for the Strait of Hormuz. Brent crude ended the week up ~2%, snapping a two-week losing streak, though it gave back significant ground on Friday as traders weighed demand destruction against stalled peace talks.