reflation

China's consumer prices rose 1.2% year-on-year in May, while producer prices increased 3.9%, driven by higher costs for energy, semiconductors, and metals. Economists suggest this signals a shift from the 2025 deflation scare to reflation, though challenges remain.

Asian stocks fell sharply as the US and Iran exchanged their largest strikes since a April ceasefire, following Iran's downing of a US helicopter near the Strait of Hormuz. The incident caused Brent crude to dip below $90 and the Philly Semiconductor Index to drop 8.62% intraday, though both partially rebounded. Uncertainty over peace talks and Hormuz's reopening is expected to persist.

China's industrial profits surged in recent months as reflationary trends offset the impact of rising costs. The increase in profits indicates improving economic conditions despite challenges from cost shocks.