Source: Wall Street News Author: Du Yu

The month-on-month CPI of the US remained stable, up 3.3% year-on-year, and the core CPI excluding the volatile food and energy increased 0.2% month-on-month and 3.4% year-on-year, the lowest in more than three years. The data was all 0.1% below market expectations and weaker than the previous value. The $100-300 billion product operating income breaks down to 401/1288/60 million yuan respectively.

Futures traders significantly raised the probability of the first rate cut in September to 70%, with the swap market fully pricing in two 25 basis point rate cuts by the Fed this year. US stock indices and precious metals rose sharply while US bond yields and the dollar plunged sharply.

The Fed's June interest rate decision remained unchanged as expected, and the dot plot lowered the expected rate cut from three times to one time this year, with the policy statement recognizing the moderate progress in the cooling of inflation. However, Powell stated that inflation progress stalled in the first quarter, implying that the rate cut would need to wait longer, which significantly narrowed the decline in US bond yields. Futures traders have higher expectations for easing and still prefer two rate cuts in 2024.

According to Global Times, the EU announced that it will impose a temporary anti-subsidy duty on electric vehicles imported from China in early July, with the highest tax rate reaching 38%. China has stated that it will take measures to safeguard its rights and interests. Many European car makers believe that the escalation of trade conflicts has done more harm than good.

The S&P and Nasdaq hit new highs for three consecutive days, AI stocks such as Nvidia, Apple, and Microsoft hit new highs, and Gamestop fluctuated significantly.

On Wednesday, June 12th, US CPI inflation unexpectedly cooled down, rekindling the enthusiasm for 'Fed rate cuts coming soon', and risk appetite continued to rise, with US stock indices opening higher and rising.

The S&P 500 index and the technology dominated Nasdaq hit new highs at the opening, with the former rising by a maximum of 1.3% and breaking through the integer level of 5400 points, and the latter rising by more than 300 points or 1.9%. The Russell 2000 index of small-cap stocks led the gains, rising by more than 3% and hitting the largest increase in half a year. The Dow rose more than 370 points or about 1% at the beginning of the session, briefly breaking through 39,000 points, and the gains narrowed significantly before noon, with other indices still hovering near the intraday highs.

After the Fed monetary policy decision was announced at 2 pm Eastern Time, the short-term gains of US stocks narrowed slightly. During Powell's press conference, the Dow fluctuated between gains and losses, and the S&P and Nasdaq wiped out earlier short-term declines and hit new highs, with the Nasdaq rising again by more than 2%, and the gains of US stocks narrowed at the end of the day. Some analysts believe that the Fed's recognition of the 'moderate' progress made in the cooling of inflation has helped sustain the stock market's rise.

At the close, the S&P 500, Nasdaq, and Nasdaq 100 set consecutive historic highs for three days, with the S&P closing above the 5,400 point mark for the first time, the Dow falling for two consecutive days to a new low in a week, and the Russell 2000 small-cap index breaking away from a six-week low:

The S&P 500 rose 45.71 points, up 0.85%, reaching 5,421.03 points. The Dow fell 35.21 points, down 0.09%, to 38,712.21 points. The Nasdaq rose 264.89 points, up 1.53%, to 17,608.44 points.

The Nasdaq 100 rose 1.3%, and the Nasdaq Technology Market Cap Weighted Index (NDXTMC), which measures the performance of the Nasdaq 100 technology stocks, rose more than 2% to an all-time high. The Russell 2000 small-cap sector rose 1.6%, and the 'panic index' VIX fell more than 6% to near 12.

Cyclical stocks such as banks and home improvement companies, which are concerned that high interest rates will stifle the economy, rose. The industry benchmark KBW Bank Index (BKX) rose more than 2% at one point, and the KBW Nasdaq Regional Bank Index (KRX) rose more than 3% at one point. The S&P homebuilding index rose 2.7% and hit a one-month high. In addition, the S&P technology sector saw its best daily performance in four months since February.

Star technology stocks rose across the board. The 'metaverse' Meta opened more than 1% higher but turned down later, closing up 0.3% to a two-month high. Amazon rose 0.6% but then fell 0.2%, still hovering around its four-week high. Microsoft rose nearly 2% to another new high, with a market value of $3.28 trillion at one point overtaking Apple, which rose more than 6% and closed up 2.9% to a historic high, with a market value of $3.27 trillion, missing the US stock market's first place. Google A rose 2% and then closed up 0.7%, Netflix rose 1% and then closed up 0.2%, Tesla rose nearly 6% and then closed up 3.9%, stopping three days of decline and leaving a four-week low.

Several chips, led by Nvidia, hit new highs, but Intel fell 0.5% after rising 1.8%. The Philadelphia Semiconductor Index rose 2.9% and broke through 5500 points for the third consecutive day, and the industry ETF SOXX also rose nearly 3% to a new high. Nvidia rose 3.6% to a new high, its market cap returned to over $3 trillion and ranking third. The long ETF with two times the amount of Nvidia longed at one point surged nearly 10% to a new high, while AMD rose 0.8%. Meanwhile, after rising more than 6% in US stocks, Taiwan Semiconductor rose more than 4%, Broadcom rose more than 2%, Applied Materials rose more than 3%, and Micron Technology rose more than 4%, all hitting new highs again.

Concept stocks related to AI rose across the board. CrowdStrike rose 0.7% for the third consecutive day of hitting new highs, while Oracle rose more than 13% to a new high and the biggest gain in three years. SoundHound.ai and BigBear.a erased more than 4% of their gains to close flat, C3.ai rose nearly 1%, Super Micro Computer rose more than 4% and closed up nearly 1% after rising, Snowflake rose 1.4%, further away from the lowest point in nearly 17 months, but Palantir fell 0.3% and Dell stopped falling to rise 0.1%.

On the news side, Broadcom's second-quarter report exceeded expectations and is conducting a 10-for-1 stock split, rising more than 8% after-hours. Morgan Stanley reiterated its “shareholding” rating on Nvidia and Tesla, predicting that Tesla may make a mobile phone. On US stocks, Taiwan Semiconductor received a target price increase from Bank of America to $180. Goldman Sachs, Evercore, and Bank of America are all bullish on the iPhone super replacement cycle with AI function and Apple's integration of ChatGPT will also benefit Microsoft, a supporter behind OpenAI. Google and OpenAI respectively reached cloud cooperation with Oracle, and the demand for AI drove the expected revenue growth for Oracle's fiscal year 2025 to double digits.

Chinese concept stocks index narrowed its gains in the closing session. ETF KWEB rose 0.2%, CQQQ rose about 1%, and the Nasdaq Golden Dragon China Index (HXC) opened higher by 0.9% before falling 0.1%, refreshing its seven-week low.

Among the popular stocks, JD rose 0.5%, Baidu rose 0.5%, and PDD Holdings rose 2.8%. Alibaba rose 0.2%, Tencent ADR rose 0.3%, Bilibili rose more than 3%, new energy vehicles fell for three consecutive days but the decline narrowed. Nio Inc, which is undergoing global business restructuring, fell more than 3% before closing down 0.3%, and Li Auto Inc fell 2% before closing down 0.6%. Xpeng fell 4.6% and then fell 2.7%, and Jili’s high-end electric car brand Ji Ke fell nearly 9% before closing down 0.8%. Zhihu rose more than 3% before US stock trading and fell by about 3% after the market opened, with a total revenue of RMB 960.9 million in the first quarter, exceeding expectations.

Individual investors hoard stock trading service provider GameStop, which continued to fluctuate significantly. After falling nearly 40% last Friday, falling 12% on Monday, and rising nearly 23% on Tuesday, the stock fell nearly 4% before the opening on Wednesday, rose more than 10% and then fell more than 16% to complete the issuance of 75 million shares and raised $2.1 billion.

Wedbush reiterated a ‘sell’ rating for GameStop due to the issuance of two stock offerings within a month, and lowered the target price to $11. Citron Research said that this offering no longer makes it short sell this stock, but they do not believe in any improvement in the company's fundamentals.

The easing of US inflation boosted market expectations for a US interest rate cut, and also drove European stocks, as a risk asset, to rise by about 1%. Banks and technology stocks led the gains, and even pushed up the automotive stocks. The pan-European Stoxx 600 index closed up 1.08%, recovering from the decline since Monday, and the Eurozone blue chips index rose nearly 1.4%. German auto stocks underperformed. ASML and Novo Nordisk both hit new highs.

The US Treasury yield plunged to a two-digit low during the session, and the decline quickly narrowed after Powell's press conference to hit a ten-week low.

Before the Federal Reserve decision was announced, US Treasury yields collectively fell sharply by double digits due to unexpected cooling of inflation, leading to rate cut expectations. The two-year US Treasury yield, which is more sensitive to monetary policy, fell the most by 16 basis points to 4.67%, the lowest in nearly ten weeks since early April, while the 10-year benchmark bond yield fell by more than 14 basis points to 4.25%, the lowest in nearly two and a half months since April 1st.

After the announcement of the Federal Reserve decision, the overall decline of the two-year US Treasury yield narrowed to less than 7 basis points, up to 4.77%, and the decline of the 10-year benchmark bond yield narrowed to 7 basis points, up to 4.30%. Powell's press conference accelerated the narrowing of the bond yield decline.

European bond yields followed suit, with the 10-year German bund yield, the eurozone benchmark, falling by more than 9 basis points to below 2.53%, the largest monthly decline in a month, and the 10-year French bond yield falling by nearly 9 basis points to 3.16%, after hitting a seven-month high of 3.34% yesterday.

Some analysts believe that the rise of Euro-skeptics in the European Parliament elections and the early parliamentary elections in France could hinder deeper European integration, and the safe-haven demand has kept the yield spread between French and German benchmark bonds at a high level since the outbreak of the pandemic, with the Italian and Greek bond yields for heavily indebted southern European countries falling by more than 14 basis points.

Oil prices rose for three consecutive days, reaching a new high in nearly two weeks during intraday trading, with US oil rising above $79 and Brent oil rising above $83.

Oil prices rose for three consecutive days, and the gains narrowed significantly during the closing session. WTI crude oil futures for July rose $0.60, up 0.77%, to settle at $78.50 per barrel. Brent crude oil futures for August rose $0.68, up 0.83%, to $82.60 a barrel.

US WTI crude oil rose as high as 1.42 dollars, or 1.8%, in intraday trading, briefly breaking through the $79 mark, while international Brent crude oil rose as much as 1.42 dollars, or 1.7%, briefly breaking through the $83 mark, both reaching their highest level in almost two weeks since May 30th, with gains narrowing after the US EIA oil inventory data.

Last week, US EIA commercial crude oil inventories rose by more than 3.7 million barrels, nearly three times the increase in the previous week, gasoline inventories exceeded expectations, and US oil imports hit a new high since 2018.

However, both the US Department of Energy and OPEC are bullish on this year's oil demand growth and expect supply shortages to occur during the year, which is generally bullish for oil prices in the short term. Morgan Stanley and Goldman Sachs also believe that the imbalance between supply and demand in the short term will push Brent crude oil up to $86 a barrel in the third quarter.

However, the International Energy Agency (IEA) has issued a bearish monthly report, significantly lowering its forecast for oil demand growth this year to 960,000 barrels per day, and stating that the world's oil will be severely oversupplied by around 2030. Citi believes that the OPEC+ production increase will push oil prices into a bear market at the end of the year and next year, and Brent crude oil may fall to $60.

The TTF Dutch natural gas futures, the European benchmark, rose more than 2% in the closing session, and ICE UK futures also rose more than 2%. US natural gas for July delivery fell more than 4% at one point and fell below the $3 mark in the short term, rising 6% for three consecutive days to a six-month high this year.

The US dollar index is off its four-week high, with the euro and the yen rising by about 1% at one point, and the offshore renminbi rising by more than 210 points at its highest.

Before the announcement of the Federal Reserve decision, the DXY US dollar index, which measures against six major currencies, fell the most by 0.9% to 104.26, breaking below the 105 mark, wiping out most of its gains since last Friday and ending its three-day consecutive rise and off its four-week high. After the announcement of the Federal Reserve decision, the decline of the US dollar index narrowed to 0.6%, trading at 104.60.

Non-US currencies rebounded, but US stocks saw a narrower gain in the closing session. The euro against the US dollar rose more than 100 points, or 1%, breaking through 1.08, avoiding a low of five weeks, and the British pound against the US dollar also rose more than 100 points and broke through 1.28, returning to a three-month high. The yen against the US dollar rose 0.9% at one point, successively breaking through 157 and 156 levels, and US stocks retreated below 156 again in the late session, wiping out almost half of the decline since last Friday. The offshore renminbi against the US dollar rose more than 210 points at its highest point, or 0.3%, approaching 7.25 yuan to a one-week high, and US stocks saw their gains halved and retreated below 7.26 yuan in the late session.

Mainstream cryptocurrencies rose together, with the largest market cap leader Bitcoin rising more than 3% and returning to the $69,000 integer mark, basically recovering from the decline since Monday, while the second-largest Ethereum also rose more than 3% and returned to $3,600, both breaking out of a three-week low since mid-to-late May.

Spot gold rose 1% and broke through $2,340, and London zinc and tin rose more than 4%, while copper rose nearly 2%, breaking away from an eight-week low.

Before the release of the Federal Reserve's decision, the cooling of US inflation stimulated expectations of interest rate cuts, which was bullish for interest-free precious metals. COMEX August gold futures rose 0.9% to $2346.30/ounce at the end of the session, while COMEX July silver futures rose 2.1% to $29.85/ounce at the end of the session.

Spot gold rose nearly $25 or 1.1%, once breaking the integer level of $2340, recovering nearly half of last Friday's decline and regaining the lowest level since the end of April and the largest decline in three and a half years. Spot silver rose more than 3% and broke the integer level of $30, getting rid of the four-week lows.

After the release of the Federal Reserve's decision, the increase in spot gold price significantly narrowed to 0.2%, fell below $2330 and once fell through the integer level of $2320, falling more than $10 compared to before the statement was released and falling $20 from the daily high.

The decline in the US dollar and US Treasury yields together is bullish for London industrial metal prices:

"Copper Doctor", an economic indicator, rose by $186 or 1.9%, re-exceeding the integer level of 9900 US dollars, getting rid of the eight-week lows. LME aluminum rose by 1.7% and got rid of the one-month lows. LME zinc rose by 4.4%, approaching $2900, and both LME lead and LME nickel rose by 1.4%, getting rid of the eight-week lows, and LME nickel returned to $18,000. LME tin rose by 4.6% and broke through $33,000, getting rid of the lows since early May.

Editor/Lambor