Daily Brief - 3 June 2024

Iron ore prices hit six-week low during China’s property woes

Iron ore prices have fallen to their lowest in six weeks due to worries about weak demand from China. The country's ongoing property crisis has reduced new home sales by 34% in May compared to last year.

Economists predict continued weakness in housing starts and construction, leading to a likely drop in iron ore prices to $100 a ton by the end of the year.

With high inventories at Chinese ports and slowing steel prices, analysts expect further price drops in June. Iron ore futures in Singapore fell significantly, reflecting these concerns.

Shein plans London IPO valued at £50 billion

Shein, the online fashion retailer, is preparing to file for an IPO in London, potentially valued at around £50 billion. This IPO could be one of the UK's largest, boosting the London Stock Exchange, which has missed out on recent European IPOs.

The move comes as Shein seeks to avoid regulatory hurdles in the US. Founded in China and now based in Singapore, Shein still needs approval from Chinese authorities for the listing.

The IPO plans emerge amid the upcoming UK elections, with Shein's executives engaging with UK Labour politicians.

Sinking profits bring reality check to AI-driven emerging market rally

Emerging market stocks face a reality check as corporate profits sink, with nearly half of companies missing earnings estimates. Average profits have dropped by 10% due to sluggish consumer demand and rising operating costs.

The MSCI Emerging Markets Index, which had a strong start to the year, is now struggling as enthusiasm for AI-related stocks wanes and China's economic stimulus fades.

The earnings season has revealed persistent weaknesses, with Chinese companies showing particularly poor results. Analysts warn that continued disappointments could lead to further declines in stock prices.