Market expectations are that the Fed will announce no interest rate hike this week, and nominal inflation may continue to cool on Tuesday, boosting risk sentiment. US stocks closed at a daily high, with the S&P 500 up nearly 1%, the Dow Jones breaking through 34,000 points, and the chip stock index up more than 3% to a 16-month high, with XPENG-W up more than 11% and NIO up nearly 9%. The long end of the US bond yield rose more during the day but fell at the end of the day, and the US dollar rebounded after hitting a three-week low, with offshore RMB briefly falling below 7.16 yuan. US oil fell nearly 5% during the day, closing at its lowest level in over two months, while Brent crude hit its lowest level since December 2021.
This week is a busy decision-making week for the central bank. The consensus expectation in the futures market is that the probability of the Fed's temporary interest rate hike in June is 75%, but given the unexpected interest rate hikes by the Reserve Bank of Australia and the Bank of Canada last week, the probability of the Fed's announcement of continued interest rate hikes on Wednesday is still 25%.
Although it has become a consensus that there will be no interest rate hike in June, traders still believe that July will be the last interest rate hike in this round of the cycle for the Fed, and then keep the interest rate unchanged before the end of the year, that is, no interest rate cut within the year. This is consistent with Goldman Sachs' expectations, which believes that interest rates will be cut next year.
It is widely expected that the European Central Bank will announce a 25 basis point interest rate hike on Thursday and then suspend interest rate hikes for the year after a 25 basis point interest rate hike in July. Reports suggest that the Bank of Japan will announce that it will maintain its current ultra-loose monetary policy on Friday, or signal an upgrade in inflation expectations in July.
US CPI data on Tuesday may strengthen expectations that "inflation is cooling down". Economists believe that May's CPI will increase by 4% YoY, weaker than April's 4.9%, but core inflation may remain high, with a MoM increase of 0.4% and a YoY increase of 5.3%, weaker than the previous value of 5.5%.
The latest survey by the New York Fed shows that US consumers' inflation expectations for the next year have fallen to a two-year low since May 2021, with a value of 4.1%, which is still double the 2% inflation target. Mid-term inflation expectations such as three-year and five-year have rebounded slightly.
The S&P 500 has risen for three consecutive days, reaching its highest level since April last year, and Tesla has risen for 12 consecutive days, the longest since its IPO, while Apple has reached a new high.
On Monday, June 12th, the expectation that the Fed will not raise interest rates in June boosted risk appetite, and US stocks opened higher collectively, with gains expanding after midday and finally closing near the daily high.
The Nasdaq led the major indices throughout the day, the S&P 500 index returned above 4300 points, breaking through this level for the first time since August last year, and the Dow Jones rose by 200 points, breaking through the 34,000 point integer mark.
As of the close, the S&P 500, Nasdaq, and Nasdaq 100 have all risen for three consecutive days, reaching their highest levels in over a year since April last year, while the Dow Jones has risen for five consecutive days, reaching a new high since April 28th:
The S&P 500 index rose 40.07 points, or 0.93%, to 4,338.93. The Dow Jones rose 189.55 points, or 0.56%, to 34,066.33. The Nasdaq rose 202.78 points, or 1.53%, to 13,461.92. The Nasdaq 100 rose 1.8%, and the Russell 2000 small-cap stocks rose 0.4%. The "panic index" VIX rose nearly 9% and broke through 15, falling below 13 last Thursday, the lowest since January 23, 2020.
The US stock market closed at a daily high, with the S&P and Nasdaq both rising for three consecutive days, reaching their highest levels since April last year.
Most of the 11 sectors of the S&P rose, with the information technology/technology sector leading the way with a rise of more than 2%, followed by consumer discretionary with a rise of 1.7%, telecommunications services with a rise of 1.2%, industrials with a rise of 0.7%, while the financial sector fell 0.09%, utilities fell 0.2%, and energy fell nearly 1%, performing the worst.
Goldman Sachs raised its year-end target for the S&P 500 index, saying that the rally will expand beyond technology stocks. Ray Dalio, founder of Bridgewater Associates, said that US Treasuries are a "very high" risk investment and that the US stock market will perform better than the bond market in the future.
Star technology stocks rose across the board. "Metaverse" Meta rose more than 2%, Microsoft rose 1.6%, both to a one-week high. Apple rose 1.6%, rising for three consecutive days to a historic closing high. Amazon rose 2.5%, approaching a nine-month high. Google A and Netflix rose 1%, with Netflix hitting a 17-month high. Tesla rose more than 2%, rising for 12 consecutive days to an eight-month high, with a cumulative increase of 36% on the 12th day, the longest consecutive increase since the company's US IPO in 2010.
Tesla rose for 12 consecutive days, the longest period since the company's US IPO.
Chip stocks rose together. The Philadelphia Semiconductor Index rose more than 3% and broke through 3600 points, reaching a 16-month high. AMD rose more than 3% to its highest level since January last year, Nvidia rose nearly 2% to its highest level in nearly two weeks, Intel rose more than 5% to its highest level in two months, and approached its highest level since August last year. Broadcom rose more than 6% to a historic high.
AI concept stocks followed the late-stage rise of chip stocks. C3.ai turned up nearly 2%, hovering around its monthly high. SoundHound.ai rose more than 6%, rising for three consecutive days to a two-month high. However, BigBear.ai rose 1.5% and then flattened out, hovering around a one-week low.
New energy vehicles lead popular Chinese stocks. The Chinese ETF KWEB rose 0.8% and then fell 0.3%, CQQQ rose 0.5%, and the Nasdaq Golden Dragon China Index (HXC) rose more than 1% and then fell slightly, losing its seven-week high. Among the Nasdaq 100 component stocks, JD.com rose 0.3%, Pinduoduo rose 2% and then fell, and Baidu fell 0.6%. Among other individual stocks, Alibaba rose 0.4%, Tencent ADR rose 0.7%, Bilibili rose more than 1%, NIO rose nearly 9%, Xiaopeng Motors rose nearly 17% and then rose more than 11%, and Ideal Motors fell 2%. NIO lowered the price of its entire product line by 30,000 yuan, and Nomura Securities downgraded its rating from buy to neutral. Xpeng Motors announced on its official WeChat account that the pre-orders for Xpeng G6 exceeded 25,000 units in 72 hours.
Banking stocks fell for three consecutive days to a new low in a week. The industry benchmark, the KBW Bank Index (BKX) of the Philadelphia Stock Exchange, fell 1%, hitting its lowest level since October 2020 on May 4. The KBW Nasdaq Regional Banking Index (KRX) fell 0.7%, hitting its lowest level since November 2020 on May 11. The SPDR S&P Regional Banking ETF (KRE) also fell 0.7%, hitting its lowest level since October 2020 on May 4.
Banking stocks fell for three consecutive days to a new low in a week.
Other stocks with significant changes include:
The US Federal Trade Commission will seek an injunction to prevent Microsoft from acquiring video game company Activision Blizzard, which fell 0.8% to a monthly low.
UBS announced the completion of its acquisition of Credit Suisse, the largest banking merger since the 2008 financial crisis. UBS European stocks rose nearly 1%, US stocks rose 0.5%, and it is expected to generate "significant" restructuring costs. The operating losses of Credit Suisse will be offset by the reduction of risk-weighted assets. Credit Suisse's shares will be delisted from the Swiss Stock Exchange as early as this week, followed by delisting from the New York Stock Exchange.
Chinook Therapeutics, a Seattle-based pharmaceutical company developing precision drugs for kidney disease, rose more than 58%, the largest increase in eight years. It will be acquired by Swiss pharmaceutical company Novartis for $40 per share in cash, a 67% premium over last week's closing price. Novartis fell more than 1% in US stocks.
The parent company of the Nasdaq Stock Exchange, Nasdaq, fell more than 13%, the largest drop since March 2020, and will acquire Adenza, a financial technology company that produces software for banks and brokers, for about $10.5 billion, the largest acquisition in its history.
Carnival Cruise Line rose more than 12% to its highest level since May last year. JPMorgan upgraded its rating to "buy" and said it was optimistic about the continued demand growth in the cruise industry. Norwegian Cruise Line rose more than 7% to its highest level in a year, and Royal Caribbean rose 2.6% to a year and a half high.
Oracle rose 6% to a record high. Its fourth-quarter financial report exceeded expectations across the board, and it rose more than 3% after hours. Wolfe Research upgraded its rating to "buy" with a target price of $130, up 18% from last Friday's closing price. The reason is that cloud infrastructure will become the engine of revenue and profit growth in the next three years. Evercore ISI is also optimistic about its cloud business, and Barclays and JPMorgan have also raised their target prices.
European stocks rose, with the pan-European Stoxx 600 index up 0.16%, the Euro Stoxx 50 index up 0.6%, the automotive sector up 1.4% leading the gains, technology stocks up more than 1%, and oil and gas and mining stocks down more than 1%. The German and Italian stock indices rose nearly 1%, leading the national indices.
Long-end US Treasury yields rose more during the day, but fell in the end, and European bond yields rebounded in a V-shape and rose at the end.
The two-year US Treasury yield, which is more sensitive to monetary policy, hovered between gains and losses, rising by more than 4 basis points at its highest point and falling by more than 5 basis points at its lowest point, ultimately falling below the 4.60% mark, but hovering near the high for the month.
The 10-year benchmark bond yield, which is closely related to economic development, stopped falling and turned up in early US stock trading, rising by more than 5 basis points at its highest point and approaching 3.80%, recovering most of the decline since last Thursday, and then turning down again at the end of the day. The 30-year long bond yield rose by nearly 6 basis points at its highest point and broke through 3.90%, recovering nearly half of the decline since last Thursday, and then fell again at the end of the day.
Long-end US Treasury yields rose more during the day, but fell in the end.
European bond yields also rebounded in a V-shape during US stock trading and rose throughout the day:
The 10-year German bond yield, the European benchmark, rose more than 1 basis point at the end of the day and approached 2.40%, falling more than 5 basis points to 2.33% during the day. The two-year yield fell slightly at the end of the day, falling more than 5 basis points at one point during the day and falling below 2.90%, reaching a high of 3% last week, the highest in nearly three months.
The Italian bond yield fell nearly 10 basis points at one point and approached 4%. Several Bank of England monetary policy committee members talked about inflation trends, which may support further interest rate hikes. At the end of the day, the two-year and 10-year UK bond yields both rose by about 10 basis points, hovering near the daily high.
Oil prices fell by 4% together, Brent crude hit the lowest closing price since December 2021, and US crude fell by nearly 5% to the lowest level since March.
Oil prices fell by 4% due to concerns about demand prospects and oil supply from Russia and Iran exceeding expectations. WTI July crude oil futures fell by $3.05, or 4.35%, to $67.12 per barrel, the lowest since March 17 this year.
US crude oil fell the most during the day, down $3.34 or 4.8%, falling below the $70 integer mark and falling below $67 at one point, falling for three consecutive days, completely giving up the gains since Saudi Arabia voluntarily cut production by an additional 1 million barrels per day in early June.
Brent August futures fell by $2.95, or 3.94%, to $71.84 per barrel, the lowest closing price since December 2021. It fell the most by $3.09 or 4.1% during the day, falling below $72, also falling for three consecutive days.
US crude oil fell nearly 5% to the lowest level in over four weeks.
Last week, oil prices fell for two consecutive weeks. Goldman Sachs raised its supply expectations for Russia, Iran, and Venezuela in 2024, and lowered its December target price for Brent crude from $95 to $86 and for WTI crude from $89 to $81, marking the third downward revision in six months. Bank of America believes that oil prices are unlikely to rise before the Fed eases monetary policy, and expects Brent crude to average around $80 per barrel this year.
ICE UK natural gas futures fell nearly 5% at the close, while European benchmark TTF Dutch natural gas futures fell by over 8%, approaching the daily low and briefly falling below the 30 euro/megawatt-hour integer mark, breaking away from the one-month high. US July natural gas futures fell 2% to a one-week low, turning higher at the close.
The US dollar rebounds, offshore RMB falls below 7.16, and the "small currency" in the currency circle stabilizes after a weekend crash of 20%
The US dollar index DXY, which measures against six major currencies, stopped falling and rebounded in US stock trading, hovering around 103.70, recovering nearly half of the decline since last Thursday, and touching a two-and-a-half-month high of 104.70 at the end of May. It fell 0.5% last week, its worst performance since mid-April.
The US dollar index stops falling and rebounds, still below the 104 level
The euro rose against the US dollar and held above 1.07, rising 0.4% last week for the first weekly gain in nearly a month. The pound fell 0.6% against the US dollar and approached 1.25, wiping out nearly half of its gains since last Thursday. The yen fell 0.3% against the US dollar and approached 139.80, wiping out nearly half of its gains since last Thursday. Offshore RMB fell below 7.16 yuan, down nearly 200 points from the previous day's close, hitting a low not seen since the end of November last year.
Most mainstream cryptocurrencies fell slightly. Bitcoin, the largest cryptocurrency by market capitalization, fell 0.6% and fell below $25,800, approaching the lowest level in over two months set last Monday. The second-largest cryptocurrency, Ethereum, fell 1.5% to below $1,730, hitting a low not seen in over two months.
Due to the US Securities and Exchange Commission's "crackdown" on the cryptocurrency industry, the "small currency" plummeted over the weekend, and Solana, Polygon, and Cardano tokens, which the SEC believes should be classified as securities, all fell by 17% to 20% at one point. After the US stock market's midday break, Solana tokens fell nearly 6%, Polygon tokens MATIC and Binance tokens BNB fell 3%, and Cardano tokens ADA rose more than 1%.
The price of "small currency" in the currency circle stabilizes after a weekend crash of 20%
Spot Gold Falls Below $1950, London Industrial Metals Fall Across the Board, Aluminum, Zinc, Nickel and Tin All Fall About 2%
The rise in the dollar and U.S. bond yields put pressure on gold prices. COMEX August gold futures fell 0.38% to $1969.70 per ounce, while October futures fell 0.37% to $1989.30 per ounce.
Spot gold fell as much as 0.6% and briefly fell below the $1950 integer mark, falling for two consecutive days and wiping out nearly half of last Thursday's gains. COMEX August silver futures fell 1.67% to $24.165 per ounce. Palladium rebounded from its lowest level since May 2019, which was set last Friday.
Spot gold falls below $1950
London industrial metals fell across the board, with only lead rising 0.8%. "Global economic barometer" copper fell 0.7% to below $8300, falling below the one-month high and hitting the highest level since May 11, when it rose for two consecutive weeks last week, reaching $8451.
London aluminum fell 1.8%, approaching the lowest level since October last year, which was set on May 24. London zinc fell 2.3%, falling further away from the two-week high. London nickel fell 2% to a one-week low below $21,000. London tin fell 2.3% and fell below $26,000, a one-month high.