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Market Overview
U.S. core PCE inflation rose 2.6% in May to hit a more than three-year low, and U.S. consumers' short-term inflation outlook fell back, briefly pushing down the dollar and U.S. Treasury yields and raising market bets on interest rate cuts.
U.S. stocks fell on the closing day of June, with the S&P Nasdaq closing down with the Dow after hitting a new intraday high, which may be related to Goldman Sachs and JPMorgan Chase shorting U.S. stocks. Amazon, Google and Microsoft fell from new highs, and chip stocks mostly rose, but Nvidia rose 3% and then fell 0.4%, and the AI boom drove the Nasdaq up 18% and the S&P up 14.5% in the first half of the year.
Markets are pricing in the chances of Trump winning the U.S. presidential election, and U.S. Treasury yields have rebounded sharply from daily lows in double digits.
Ahead of the parliamentary election, French stocks fell 2% for the week to a five-month low, with base bond yields jumping 74 basis points in the first half of the year.
The U.S. dollar rose for four consecutive weeks and rose more than 3% in the first half of the year, the yen once fell below 161 to a 38-year low and fell 12% in the first half of the year, and the offshore yuan hovered at a seven-month trough of 7.30 yuan.
Oil prices rose for three consecutive weeks and were close to the highest since the end of April, with U.S. oil rising more than 6% in June and Brent oil rising more than 12% in the first half of the year. Gold fell for the first time in four months, but rose nearly 14% in the first half of the year, and silver rose nearly 26% this year. In June, nickel fell 12%, aluminum and copper fell nearly 5%, tin rose more than 29% in the first half of the year, and copper rose more than 12%.
In the Chinese market, A-shares ended the first half of the year, with the ChiNext closing down more than 1%, brokerages falling sharply, and Oriental Fortune falling 7%.
News
The People's Bank of China: Deepen the supply-side structural reform of the financial sector and build an institutional mechanism for the financial sector to effectively support the real economy.
The US media summarized the performance of both sides in the first 30 minutes of the TV debate of the candidates in the US election: Biden was incoherent at times, and Trump lied. Poll data shows that in key "swing states," Trump leads by an average of 3.2 percentage points. Goldman Sachs: U.S. election risks are starting to affect markets. 16 Nobel laureates in economics signed a joint letter: Trump is an "inflation bomb".
The U.S. core PCE price index was 2.6% year-on-year in May, the lowest in three years, and the supercore PCE price remained high, and income and expenditure accelerated year-on-year.
Japan's top foreign exchange official at the Ministry of Finance has been replaced, and the market suspects that Japan may intervene on a larger scale in the foreign exchange market. The Japanese yen fell below 161 and hit a 38-year low.
In the countdown to the French election, Macron's approval rating is still at the freezing point, and the French debt has fallen to a seven-month low.
The market closes
U.S. stocks: The Dow fell 0.12%, the S&P 500 fell 0.41%, and the Nasdaq fell 0.71%.
European stocks: The European STOXX 600 index closed down 0.23%, down 1.30% in June, and up 6.77% in the first half of the year. Germany's DAX 30 index closed up 0.14%. France's CAC 40 index closed down 0.68%. Britain's FTSE 100 index closed down 0.19%.
A-shares: The Shanghai Composite Index rose 0.73%, the Shenzhen Component Index fell 0.01%, and the ChiNext Index fell 1.16%.
Bond market: The yield on the benchmark 10-year Treasury note rose 9.59 basis points to 4.3823%, down 11.82 basis points in June and up 50.32 basis points in the first half of the year. The two-year Treasury yield rose 2.07 basis points to a new daily high of 4.7327%, down 12.75 basis points in June and up 48.28 basis points in the first half of the year.
Commodities: WTI crude oil futures for August delivery closed down $0.20, or 0.24%, at $81.54 a barrel, up nearly 6.27% in June and nearly 13.74% in the first half of the year. Brent crude oil futures for August closed up $0.02, or 0.02%, at $86.41 per barrel, up more than 6.53% in June and more than 13.44% in the first half of the year. In June, London nickel fell by about 12%, London aluminum fell by more than 4.9%, and in the first half of the year, London tin rose by more than 29%, London copper rose by more than 12%, and London zinc rose by more than 10%. Spot gold fell 0.03% to $2,326.75 an ounce, down about 0.10% in June, and rose 12.78% in the first half of 2024.
Highlights
Global blockbuster
The People's Bank of China: Deepen the supply-side structural reform of the financial sector and build an institutional mechanism for the financial sector to effectively support the real economy. The central bank pointed out that it is necessary to effectively implement various existing structural monetary policy tools, and promote the implementation of newly established tools such as re-lending for scientific and technological innovation and technological transformation, and re-lending for affordable housing. Increase financial support for the "market + security" housing supply system, and promote the acceleration of the construction of a new model of real estate development.
The US media summarized the performance of both sides in the first 30 minutes of the TV debate of the candidates in the US election: Biden was incoherent at times, and Trump lied.
- In the first televised debate of the 2024 presidential election in the United States, incumbent President Biden and former President Trump clashed fiercely, focusing on issues such as the withdrawal of troops from Afghanistan and the conflict between Russia and Ukraine. The two sides engaged in fierce "personal attacks", and the end of the "verbal battle" was scheduled for September 10. Poll data shows that as of June 25, Trump led Biden by an average of 1 percentage point in national polls; In key "swing states," Trump leads by an average of 3.2 percentage points.
- Goldman Sachs: U.S. election risks are starting to affect markets. Goldman Sachs pointed out that the case for hedging equity risk exposure is not strong at the moment, but in the face of the Fed's uncertain monetary policy and tariff risks, debt problems, etc., may put more pressure on the stock market.
- 16 Nobel laureates in economics signed a joint letter: Trump is an "inflation bomb". Economists have warned that Trump's "irresponsible budget will reignite inflation," especially with his policies of imposing universal tariffs on foreign goods and deporting immigrants, could have catastrophic long-term effects on the U.S. and global economy. But Wall Street analysts say both parties are now protectionists, and inflation is destined to rise, with only the difference being fast or slow.
The core PCE price index in the United States in May was 2.6% year-on-year, the lowest in three years. The core PCE price index rose 0.1% month-on-month in May, the lowest since December 2023. However, the data was mixed, with supercore PCE prices remaining high, rising for the 49th consecutive month, and revenue and expenditure accelerating year-on-year. After the release of the data, the U.S. dollar index fell about 14 points in the short term, U.S. stock futures did not fluctuate much in the short term, and the U.S. 10-year Treasury yield fell in the short term.
Japan's top foreign exchange official at the Ministry of Finance has been replaced, and the market suspects that Japan may intervene on a larger scale in the foreign exchange market.
- Jun Mimura, the current director of the International Bureau of the Ministry of Finance, will succeed Masato Kanda as the top foreign exchange official in Japan, and the market expects that there will be no change in the general policy direction.
- Asian stock markets rose on Friday, with Japanese stocks hitting a three-month high and Japan's Tokyo inflation data rebounding, but the yen still fell below 161 yen per dollar, hitting a 38-year low. Bank of America said that keeping an eye on the 164.5 mark, the speed of the decline is also the key. Intervention could also be triggered if the JPY falls below 164 by the end of the week, especially if it falls sharply by more than 1% intraday and the implied volatility of monthly options rises to 11.
In the countdown to the French election, Macron's approval rating is still at the freezing point, and the French debt has fallen to a seven-month low. A poll released on Friday showed Macron's approval rating fell 6 percentage points to 36 percent, the lowest in three months. According to polls, the far-right National Alliance will receive 36.2% support on Sunday, compared with only 20.4% for Macron's Ba'ath Party; Some media estimates suggest that the National Alliance and its allies may win a majority of seats in parliament, becoming an absolute majority, and receiving a clear mandate to govern.
Domestic macro
Seven departments including the People's Bank of China: Strengthen the functions of serving scientific and technological innovation such as stocks, the New Third Board, and regional equity markets. The work plan points out that policy support for cross-border financing of technology-based enterprises should be strengthened. We will focus on supporting small and medium-sized science and technology enterprises, improve credit and insurance products that adapt to the characteristics of science and technology enterprises in the start-up and growth stages, further promote regional equity market innovation pilots, and enrich the sources of funds and exit channels for venture capital funds.
China Securities Regulatory Commission: We will step up research and plan a package of measures to further deepen the reform of the capital market in an all-round way. The proposal points out that to further deepen the reform of the capital market in an all-round way, it is necessary to focus on serving scientific and technological innovation and the development of new quality productive forces, and accelerate the construction of a full-chain market service system and related institutional mechanisms that are compatible with it. Adhere to the priority of quality, strictly control the IPO access, and improve the accurate identification mechanism of science and technology enterprises. Coordinate the balance between the primary and secondary markets, make greater efforts to promote the entry of medium and long-term funds into the market, and strive to enhance the internal stability of the capital market.
EU will "slightly cut" tariffs on Chinese electric vehicles? Ministry of Commerce: At present, the working teams of the two sides are in close communication. According to the Global Times, BYD kept the tariff unchanged at 17.4%, the tariff on Geely Automobile from 20% to 19.9%, and the tariff on SAIC Motor from 38.1% to 37.6%. Other Chinese companies that cooperate with the investigation but are not subject to random inspections will be subject to an additional 20.8% tariff, and those that do not cooperate with the investigation will face a 37.6% tariff.
The effect of "mid-year high interest" is no longer there, and the cargo base and repo yield are lower. The "baby" income fell below 1.5% in batches, and the high yield of reverse repurchase was temporarily "absent".
Domestic companies
The Apple Vision Pro, priced at nearly 30,000 yuan, was officially launched, and China was the first batch of countries outside the United States to sell it. You can't buy it directly on site, you can only buy it by making an appointment in advance, and the Vision Pro experience reservations at the 5 Apple Stores in Beijing have been booked until after July 3.
Amazon vs. Temu, Citi is still bullish on Pinduoduo. Temu is very different from Amazon's low-cost store in terms of pricing power and warehousing model. Citi believes that the success of Amazon's low-cost store could make Temu less attractive to sellers, especially high-quality sellers who prefer to retain pricing power rather than being squeezed by Temu. However, Citi remains bullish on Pinduoduo and raises its price target to $198, which is about 51% upside.
In the first half of the year, the total amount of land acquired by the top 100 real estate enterprises was 380.1 billion yuan, and the central and state-owned enterprises were still the main force. From the perspective of the amount of land acquired by each urban agglomeration, the Yangtze River Delta leads the country.
Longfor, a private real estate giant, repaid 7.1 billion yuan in one go. Longfor announced that it has repurchased two US dollar bonds from the open market, with a total principal amount of about US$623 million, and the maturity dates of these two US dollar bonds are September 2029 and January 2032 respectively. On the same day, Longfor also paid a CMBS with a scale of 2.65 billion yuan in advance, and the related bonds were delisted.
The share price of "Bond Mao" Oriental Wealth was raided again, and the institution reviewed: strictly investigating the rumors of stock speculation by brokerage employees does not constitute a substantial negative effect. Some analysts believe that the weaker share price performance of Oriental Wealth in the recent stage is more a reflection of a certain market expectation: the traditional brokerage business is facing a homogenization tendency and the decline of Internet dividends, and the non-homogeneous investment banking, asset management and other businesses have no competitive advantage over the head brokerage.
Geely Automobile's revenue increased by 56% in the first quarter, net profit doubled, and Zeekr delivery rose 117% year-on-year. Geely Automobile's sales in the first quarter were 475,700 units, a year-on-year increase of 49%. Its ZEEKR delivered 33,000 vehicles in the first quarter, and its gross profit margin increased by 3.4 percentage points.
Overseas macro
Goldman Sachs flow experts warn: bulls began to reduce their positions after July 4. Next week will be the best few gold trading days of the year and the best two-week trading period. Since 1928, the first half of July has been the best-performing two-week trading period for the S&P 500 of the year; The first half of August was one of the worst two-week trading periods for the S&P 500.
JPMorgan strategists warn that the S&P 500 could plunge 23% by the end of the year. JPMorgan Chase & Co. strategist Marko Kolanovic said headwinds were accumulating, including a slowdown in the U.S. economy and downwards in corporate earnings. U.S. stock valuations are "disconnected" from the business cycle.
Overseas companies
Shortly after the merger control review ended, the European Union considered launching an antitrust investigation into Microsoft's partnership with OpenAI.
Supermicrocomputer is expected to be included in the Nasdaq 100 index, replacing Walgreens, the second-largest pharmacy chain in the United States, which is underperforming.
The stock price of the gym pants boss and the sneaker boss is bleak, and the jeans boss has also dived. Nike's stock price plummeted, lululemon was sluggish this year, and the sportswear giant struggled to transform under the impact of new products.
Today's news preview
China's official manufacturing, non-manufacturing, composite PMIs for June.
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