From May 29th to June 4th, international oil prices fell rapidly, with five consecutive bearish candlesticks and a cumulative drop of nearly 10%, reaching a low of $72.48, just one step away from the psychological level of $70. There are two main reasons for the decline in international oil prices. One is that OPEC's production cut was less than expected. After the 37th ministerial meeting of OPEC on Sunday last week, it was announced that the voluntary production cut measures (about 2 million barrels per day, originally scheduled to expire at the end of June) would be extended to the end of 2024; collective production reduction measures (about 39 million barrels per day) would be extended until 2025. Although production cuts have been extended, there is no new production reduction plan as expected by the market. Under the disappointment of the expectation, international oil prices were negatively affected. The other reason is that the interest rate cuts of Europe and America are coming, meaning that there is downward pressure on the economy. Yesterday, the Bank of Canada announced its rate decision, cutting interest rates by 25 basis points and lowering the benchmark interest rate to 4.75%. Canada's latest core CPI annual rate is 1.6%, already lower than the moderate inflation standard of 2%, and the potential risk of recession has increased. The European Central Bank's interest rate decision today also has the possibility of interest rate cuts. Market participants expect the Fed to cut interest rates for the first time before the end of the year. Once the inflation rate of European and American countries falls more than expected, the demand for crude oil will significantly decrease. Coupled with OPEC's insufficient production reduction plan, the decline in international oil prices is logical.

After a cumulative decline of 1484 points in the last four trading days in the Hong Kong stock market, this morning it fluctuated downwards. The Hang Seng Index fell 87 points or 0.4% to 21,164. The National Index fell 13 points or 0.2% to 7,607; the Hang Seng Technology Index fell 77 points or 1.6% to 4,658. The overall market turned from decline to rise in the afternoon but temporarily lacked strength.

The Ministry of Finance of China held a press conference last weekend, stating that it will introduce a package of incremental policy measures, showing a willingness to increase policy intensity to deal with risks such as real estate and local government debt, benefiting various sectors with positive policy implications.

The Ministry of Finance initiated the capital replenishment work for state-owned major banks, boosting mainland banking stocks. Agricultural Bank of China (01288), Industrial and Commercial Bank of China (01398), Bank of Communications (03328), Bank of China (03988), and China Construction Bank Corporation (00939) rose by 3.2% to 4.2% respectively.

The Ministry of Finance stated its intention to use special bonds to purchase existing commercial housing, benefiting mainland real estate stocks. Hopson Development Holdings (01813) rose by 5.7%, Country Garden (01109), China Overseas Land & Investment (00688), Greentown China (03900), and Yuexiu Property (00123) rose by 4.2% to 5.1%.

Four departments announced the overall planning of a group of landmark major engineering projects, benefiting infrastructure stocks. China Railway Construction Corporation (01186), China Communications Construction Company (01800), and China State Construction Engineering Corporation (03311) rose by 2.1% to 3%. Zoomlion Heavy Industry Science and Technology Co., Ltd (01157) rose by 5.3%.

In addition to the above sectors, most other industries experienced a decline, with the technology index falling 1.6% in the afternoon. Semiconductor Manufacturing International Corporation (00981) led the gains with an increase of 3.9%, while JD.com (09618) and BYD Electronic Co., Ltd (00285) rose by 1.7% and 0.9% respectively. Other major technology stocks experienced moderate declines.

Digital health and pharmaceutical stocks mostly remained weak, with China National Pharmaceutical Group (01099), Innovent Biologics (01801), Wuxi Bio (02269), and Pharmaron (03759) falling by over 4%, while Beigene (06160) and WuXi AppTec (02359) dropped by over 5%.

Consumer stocks retreated, with declines of over 5% for Hisense Ha (00921), Bud APAC (01876), China Mainland Duty Free (01880), and Samsonite (01910). China Feihe (06186), Topsports (06110), and Yihai Intl (01579) fell by over 6%, while Anta Sports (02020) and Jiumaojiu (09922) experienced significant drops of 8.9% and 9.1% respectively. Midea Group Co., Ltd (00300) was included as a Hang Seng Tech Index constituent through the Shenzhen-Hong Kong Stock Connect, yet its stock price still fell by over 4%.

With the continued increase in policy stimulus, the Hang Seng Index is in a short-term consolidation phase from its high levels, mainly restricted below the 10-day moving average. However, it is expected to maintain support around the 20-day moving average, so the consolidation within the range of 21,600 to 19,900 is temporarily preserved.