Next week's heavy schedule: US-Germany summit, US non-farm payroll, ECB decision, Powell's speech, Japan government bond auction

Overview of Major Financial Events from June 2 to June 8, all times in Beijing:

Key Focus This Week: The Germany-U.S. summit, China releases May Caixin PMI and foreign exchange reserve data, the U.S. releases May non-farm payroll report and April trade balance, the European Central Bank holds May interest rate decision, Jerome Powell delivers a speech, the Federal Reserve publishes the Beige Book on economic conditions, and two Japanese long-term bond auctions.

In addition, South Korea holds a presidential election, Bessent chairs the Financial Stability Oversight Council (FSOC) meeting, OECD releases the latest economic outlook, Xiaomi's 2025 Investor Day, global simultaneous release of Switch 2, and Broadcom's earnings report.

With the Dragon Boat Festival holiday approaching, the A-share market will be closed from May 31 (Saturday) to June 2 (Monday), and will resume normal trading on June 3 (Tuesday).

Germany-U.S. Summit

According to Global Times, a spokesperson for the German government stated on May 31 that German Chancellor Merz will visit Washington on Thursday (June 5) to meet with U.S. President Trump. This will also be the "first" meeting between the two since Merz took office.

The statement indicated that the meeting will discuss bilateral relations as well as international issues such as the Russia-Ukraine conflict, the situation in the Middle East, and trade policy. According to a senior official, after the lunch meeting, the two leaders plan to hold a press conference at the White House before Merz departs for Berlin.

The report mentioned that, given that Ukrainian President Zelensky and South African President Ramaphosa were publicly criticized by Trump during their previous meetings at the White House, German officials are concerned that Merz may face similar treatment. To narrow the differences, Merz has expressed a willingness to meet some of Trump's demands, including a commitment to increase Germany's defense spending to 5% of GDP in the coming years.

China’s May Caixin PMI and Foreign Exchange Reserves

On Tuesday (June 3) and Thursday (June 5), S&P Global will release China's May Caixin Manufacturing PMI and Services PMI, respectively.

Data from the National Bureau of Statistics shows that China's official Manufacturing PMI rose by 0.5 percentage points to 49.5 in May, while the Non-Manufacturing PMI fell by 0.1 percentage points to 50.3, still above the critical point, continuing the overall expansion.

According to Minsheng Macro, the resilience of production is stronger than that of demand, which has a greater impact on the rise of the May PMI. The "ice-breaking" between China and the U.S. in May has also diluted export risks; however, the continued decline in the two major price indicators of PMI indicates that economic operating pressure still exists Policy financial instruments will become a key policy for "stabilizing expectations" in the near term, with a possible greater focus on key areas such as technological innovation.

On Saturday (June 7), China announced its foreign exchange reserves for May.

Data released last month shows that China's foreign exchange reserves have remained stable at USD 3.2 trillion for 17 consecutive months, and the central bank has increased its gold holdings for six consecutive months.

A relevant official from the State Administration of Foreign Exchange stated that China's economy is showing a positive trend, with strong resilience and vitality in economic development, which is conducive to maintaining the basic stability of foreign exchange reserves.

U.S. May Non-Farm Payrolls Expected to Slow, May Raise June Rate Cut Expectations

On Friday (June 6), the U.S. released its non-farm payroll report for May.

Economists generally expect that the number of new jobs added in May will decrease from 177,000 last month to 130,000, with the unemployment rate remaining steady at 4.2%, indicating a moderate slowdown in the job market.

Due to unexpectedly strong employment data last month, Wall Street expects the timing of the rate cut to be postponed from June to July. As the last employment data before the Federal Reserve's June meeting, if May's non-farm payrolls slow as expected, it may reignite market expectations for a rate cut in June.

Swap market data shows that the probability of the Federal Reserve remaining "on hold" in June is currently as high as 98%.

U.S. Trade Balance Released, Has "Export Rush" Ended?

On Thursday (June 5), the U.S. released its trade balance for April.

The market generally expects that the U.S. trade deficit in April will narrow from USD 140.5 billion last month to USD 117.3 billion, indicating a moderation of the "export rush" effect.

The survey data from the Institute for Supply Management (ISM) last month showed that the import volumes of manufacturers and service providers have decreased, indicating that the strategy of rushing to import before tariff increases is coming to an end.

In addition, the sharp expansion of the trade deficit was a major reason for the U.S. economy contracting for the first time since 2022 in the first quarter. From January to March this year, U.S. GDP decreased by 0.3% quarter-on-quarter, with net exports dropping by nearly 5 percentage points, marking the largest decline on record.

ECB June Rate Cut "Set in Stone"?

On Thursday (June 5), the European Central Bank announced its latest interest rate decision. The market generally expects that the European Central Bank will continue to cut interest rates in June, with investors focusing on the wording regarding the subsequent interest rate path in the meeting. Considering the tariff threats that weigh on the economic growth prospects of the Eurozone and increase medium- to long-term inflation pressures, the difficulty of monetary policy decision-making for the European Central Bank is also increasing.

Over the past year, the bank has completed seven interest rate cuts.

Powell's Speech

On Tuesday (June 3), Federal Reserve Chairman Jerome Powell delivered opening remarks at an event.

At the monetary policy meeting in early May, Federal Reserve policymakers generally believed that the uncertainty facing the economy was higher than before, and it was appropriate to remain cautious regarding interest rate cuts, waiting for clearer impacts from tariffs and other policies of the Trump administration before considering action.

Minneapolis Federal Reserve President Neel Kashkari recently stated that the biggest risk facing the U.S. economy is the shadow of significant new policies, and it is uncertain whether the situation will be clear enough by September. The Federal Reserve "must look at what the data says, while also observing the progress of trade negotiations."

This week, Federal Reserve Governor Christopher Waller, Federal Reserve Governor Lisa Cook, Dallas Federal Reserve President Lorie Logan, Chicago Federal Reserve President Austan Goolsbee, Atlanta Federal Reserve President Raphael Bostic, and Philadelphia Federal Reserve President Patrick Harker will also successively deliver public speeches, releasing the latest monetary policy signals.

Federal Reserve Releases Economic Conditions Beige Book

On Thursday (June 5), the Federal Reserve released the national economic conditions survey report "Beige Book," compiled by 12 regional Federal Reserve Banks.

The Beige Book released last month showed that as economic uncertainty increased, especially regarding tariffs, the outlook in several regions "significantly deteriorated."

In terms of inflation, prices generally rose across U.S. regions, with businesses expecting tariffs to lead to increased input costs; regarding employment, overall employment in the U.S. remained unchanged or slightly increased.

The report also mentioned that consumers rushed to purchase vehicles and non-durable goods before tariff-related price increases, while the number of international tourists declined. Additionally, non-automotive consumption overall decreased.

As tariff policies continue to be filled with uncertainty, the term "uncertain" is expected to remain prominent in the Beige Book.

Will Two Japanese Long-Term Bond Auctions Continue to "Cool"?

The Japanese Ministry of Finance will hold auctions for 10-year and 30-year government bonds on Tuesday (June 3) and Thursday (June 5), respectively.

The Japanese bond market has recently experienced continued volatility, with two key ultra-long-term bond auctions suffering "defeats," setting a record for the worst subscription rates in history, raising concerns about supply and demand imbalances, and causing Japanese bond yields to continue to rise.

In this context, investors will closely monitor the upcoming two long-term bond auctions. If they are still worse than expected, it may again push up Japanese bond yields and amplify global liquidity tightening risks.

It is worth noting that on Tuesday (June 3), Bank of Japan Governor Kazuo Ueda will deliver a speech, and attention will be paid to his stance on the volatility of the bond market

Broadcom's Earnings Report is Coming Soon

On Thursday (June 5), Broadcom will release its Q2 earnings report for fiscal year 2025.

In the earnings report released last quarter, Broadcom projected Q2 revenue to reach $14.9 billion, a year-on-year increase of 19%, exceeding analysts' expectations of $14.59 billion; it is expected that Q2 AI semiconductor revenue will reach $4.4 billion.

As one of the major suppliers of data center infrastructure, Broadcom not only provides custom AI chips for Google but also supplies key components for the network infrastructure that supports AI software development. The AI boom has driven Broadcom's market value to exceed $1 trillion at one point.

Among the 31 analysts tracking the stock, 28 have given a "strong buy" rating, while 3 have rated it as "hold." The average target price for the stock is $242.19, indicating a strong upside potential of 26.7% compared to the current stock price.

Other Important Data, Meetings, and Events

• On Monday (June 2), the U.S. will release the ISM Manufacturing Index for May.

Economists generally expect the ISM Manufacturing Index for May to rise from 48.7 last month to 49.2, recovering from a near five-month low, but still remaining below the expansion-contraction threshold.

• On Wednesday (June 4), the FSOC meeting will be held.

U.S. Treasury Secretary Janet Yellen will chair the Financial Stability Oversight Council (FSOC) meeting on June 4. Officials from top financial regulatory agencies, including the Federal Reserve and the U.S. Securities and Exchange Commission (SEC), will attend.

Public information shows that the FSOC was established in 2010 to monitor and manage systemic risks to prevent future financial crises and maintain the stability of the U.S. financial system.

• Ningde Times' weekly options will be launched on Monday (June 2).

On May 16, the Hong Kong Stock Exchange announced that monthly options for Ningde Times' H shares will be launched on the same day as the listing of Ningde Times shares on May 20, 2025, while weekly options contracts will be launched on June 2, 2025.

• South Korea will hold elections on Tuesday (June 3).

A total of seven candidates are competing in this election, and early voting has already begun.

On April 4, South Korea's Constitutional Court passed a ruling to impeach President Yoon Suk-yeol, resulting in his removal from office. According to the law, South Korea must hold a new presidential election within 60 days.

According to the latest poll results released on the 28th by the polling agency "Real Meter," cited by Xinhua News Agency, in the support rate survey for presidential candidates conducted from the 26th to the 27th, Democratic Party candidate Lee Jae-myung leads with a support rate of 49.2%, followed by People Power Party candidate Kim Moon-soo at 36.8%, and Reform New Party candidate Lee Jun-sik at 10.3%

• On Tuesday (June 3), the Organisation for Economic Co-operation and Development (OECD) will release its latest Economic Outlook report.

The OECD will analyze global major short-term economic trends and prospects in the report. This outlook covers a range of variable forecasts for all member countries, the Eurozone, and some non-member countries.

In the mid-term economic outlook released in March, the OECD predicted that the expansion of major economies would slow down, uncertainty would rise, and emphasized the risks of further differentiation as well as policy choices that could affect future resilience.

• On Thursday (June 5) at 0:00, the Switch 2 will be released globally.

According to Global Times, compared to the previous generation, the Switch 2 has achieved a comprehensive upgrade in hardware performance, game lineup, and interactive experience. The launch lineup includes the open-world racing game "Mario Kart World," the destruction-driven game "Donkey Kong Bananza," and "Kirby: Air Ride."

It is reported that the Switch 2 will be available in both Japanese and international versions. The Japanese version is priced at 49,980 yen (approximately 2,421 RMB), supports only Japanese and Japanese server accounts, and requires conditions such as being an NSO member for at least one year and having over 50 hours of gameplay to participate in the lottery purchase; the international version is priced at 69,980 yen (approximately 3,390 RMB), has no regional restrictions, and supports 16 languages.

Nintendo explained that this move is to address the depreciation of the yen and the issue of scalpers reselling across countries, but analysts are concerned that it may affect global sales targets.

• On Tuesday (June 3), Xiaomi Group will hold its 2025 Investor Day.

During this Investor Day event, the company's management and heads of various business departments will share the latest updates on corporate strategic direction and business development with the public, and there will also be arrangements for investors to visit the Xiaomi automobile factory.

At last year's Investor Day event, Xiaomi's founder and management, including Lei Jun, Lu Weibing, and Lin Shiwei, delivered keynote speeches on the company's business strategy and participated in Q&A sessions with investors.

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