Markets Mixed as Hang Seng Breaks 24K on Trade Optimism; Crypto Stalls Ahead of U.S. CPI

Hong Kong’s Hang Seng Index climbed above the 24,000 mark for the first time since March, rising 1.3% on Monday amid growing optimism surrounding renewed U.S.–China trade negotiations in London. However, major cryptocurrencies remained lackluster as investors turned their attention to this week’s critical U.S. inflation report.

Crypto Markets Show Caution

Bitcoin (BTC) hovered near $105,650, trading flat to slightly lower after forming a doji candle on Sunday—typically a sign of market indecision. On-chain metrics echoed the cooling sentiment, with Blockchain.com data showing the 7-day average of daily BTC transactions falling to 315.5K, the lowest level in at least 12 months.

XRP, despite briefly breaking above a key descending trendline from mid-May, failed to sustain momentum and was last down over 1% at $2.24. Market participants are eyeing potential volatility as the APEX 2025 conference kicks off this week in Singapore.

Dogecoin (DOGE) slipped nearly 2% to $0.161, as bulls failed to reclaim the 100-day simple moving average over the weekend. The meme coin appears to be losing traction near the psychological $0.18 level.

Asia Rallies on Trade Sentiment

The rally in the Hang Seng was driven by renewed diplomatic engagement. U.S. and Chinese trade representatives began meetings in London, with expectations that discussions could extend throughout the week. President Donald Trump posted on Truth Social Friday that he is optimistic about the outcome, saying, “The meeting should go very well.”

Other major Asian indices joined the advance, including South Korea’s KOSPI and China’s Shanghai Composite, despite ongoing signs of economic stress on the mainland.

China’s Deflation Deepens

Fresh data from China’s National Bureau of Statistics revealed worsening deflationary pressure. In May:

• Consumer Price Index (CPI) fell 0.1% YoY, maintaining a negative reading since February.
• Producer Price Index (PPI) declined 3.3% YoY, exceeding forecasts and marking continued deflation in factory gate prices since late 2022.

According to Robin Brooks, Senior Fellow at Brookings, U.S. tariffs are exacerbating China’s slowdown:

“All the necessary conditions for deflation are in place—weak consumption, high debt, and now tariffs acting as the catalyst.”

In response, Chinese policymakers are expected to intensify monetary easing. The People’s Bank of China (PBOC) already cut benchmark rates in May and may further reduce the reserve requirement ratio (RRR) later this year to stimulate growth and liquidity. Additional stimulus could eventually benefit risk assets, including cryptocurrencies.

All Eyes on U.S. CPI Data

Markets are now closely watching the U.S. Consumer Price Index (CPI) for May, due Wednesday. Analysts expect:

• Headline CPI: +0.2% MoM | +2.5% YoY (vs. +2.3% in April)
• Core CPI (ex-food & energy): +2.9% YoY (vs. +2.8% in April)

Economists at Barclays warn that the data may begin to reflect early price pressures from Trump’s tariff policies. A hotter-than-expected reading could dampen hopes for Federal Reserve rate cuts, injecting renewed volatility into equity and crypto markets.

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