This week, China announced that its trade surplus expanded by more than expected in May. In dollar terms, the surplus widened to $105.43 billion from $84.80 billion in April, driven by another strong month for exports, which rose 19.4% year-on-year. The figures suggest global demand remained resilient despite supply chain disruptions and heightened investor caution stemming from the recent conflict in the Middle East. The sharp increase also reflected a favourable comparison with last year, when uncertainty surrounding US-China trade relations weighed on trade activity. Imports were similarly robust, climbing 27.4% over the same period.
At the same time, China appears to be accelerating its ambitions in artificial intelligence and advanced technology. Reports this week suggested that the National Development and Reform Commission is among several government agencies developing a plan to expand the country’s data centre infrastructure, with investment potentially reaching 2 trillion yuan to create a nationwide network of interconnected computing hubs. Under the proposal, around 80% of the technology would be sourced from domestic suppliers, underscoring Beijing’s push to reduce its reliance on foreign technology, including Nvidia’s AI chips. If implemented, the initiative would represent one of the first major projects under China’s recently unveiled five-year plan, which aims to strengthen self-reliance and position the country ahead of the US in the global AI race.
Japan’s revised GDP data showed the economy growing at an annualised 1.8% in Q1, slightly below the initial 2.1% estimate but still ahead of expectations. The downgrade mainly reflected softer capital spending, with firms cutting back on software and equipment investment. Despite uncertainty linked to Middle East tensions, the broader outlook remains fairly constructive. Ongoing investment in AI, automation and digital infrastructure continues to support longer‑term demand, suggesting the slowdown is more of a brief pause than a shift in trend. For the Bank of Japan, the figures are unlikely to alter its gradual path toward higher interest rates, with future moves still dependent on data around consumption, wages and inflation.
While the ceasefire hasn’t fully broken down between the US and Iran, the US carried out what it described as defensive strikes on Iran this week. President Trump has insisted he is not seeking a wider conflict and says he hopes to keep negotiations on track to prevent further escalation.
Reports that SpaceX is set to IPO this week have traders sitting up and taking notice. Elon Musk’s aerospace company is reportedly expected to price its shares at around $135, implying a valuation of approximately $1.7 trillion. Investor demand has already been exceptionally strong, with reports suggesting the order book is more than twice oversubscribed ahead of the listing. In a notable departure from most high-profile IPOs, SpaceX has also reserved around 30% of the offering for retail investors—significantly more than is typically allocated—giving everyday investors a rare opportunity to participate. If the listing lives up to the hype, it could provide a significant boost to market sentiment and signal that investor appetite for high-growth technology companies remains firmly intact.
Still to come this week we have US inflation, the ECB’s latest monetary policy decision and US Michigan Consumer Sentiment.
Nicola Tune, Portfolio Specialist