Manufacturing data hits interest rate cut expectations, US bonds plunge, S&P and Dow Jones fall back, Chinese concept stocks start the second quarter with a bang, gold surges to new historical highs before falling back

The US ISM Manufacturing Index for March was released on Monday, exceeding expectations and rising to 50.3. This is the first time since September 2022 that it has risen above 50.00, returning to the expansion zone after 16 consecutive months of manufacturing activity contracting below 50.

Following Federal Reserve Chairman Powell's reiteration last Friday that there is no rush to cut interest rates, the strong manufacturing data reinforced the market's expectation that the Fed is not in a hurry to cut rates. The market now estimates the probability of a rate cut by the Fed in June to be less than 50%. US Treasury prices plunged intraday, yields rose, the US dollar index surged, and major US stock indices all fell in unison intraday.

After the release of the ISM data, yields on 3 to 30-year US Treasury bonds rose by more than 10 basis points intraday. The yield on the 2-year bond, sensitive to interest rates, rose above 4.70% for the first time since late March; the 10-year yield rose above 105.00 for the first time in over four months; major US stock indices, which had a strong first quarter, all turned lower intraday, failing to start the second quarter on a positive note, with the Dow and S&P falling from record highs and the Nasdaq falling for two consecutive trading days.

Some blue-chip technology stocks fell, weighing on the broader market. Among the "Seven Sisters" of tech giants, Tesla, whose first-quarter delivery volume expectations have been successively lowered by Wall Street analysts due to concerns about demand in the Chinese market, led the decline. Tesla, which fell nearly 30% in the first quarter, further declined, coinciding with the price increase of the Model Y sold in China after the hot pre-sale of Xiaomi's car listing last Thursday. Nvidia fluctuated at the forefront, erasing an initial gain of over 2% in early trading, then paring losses at midday, while Tesla narrowed most of its declines, easing downward pressure on the broader market.

On the other hand, chip stocks continued to rise overall, with Micron Technology leading the way after Bank of America raised its target price on expectations for high-bandwidth memory (HBM) products. Western Digital and the "demon stock" in the AI concept, Super Micro Computer (SMCI), rose after reports last Friday that Microsoft plans to invest billions of dollars with OpenAI to jointly develop artificial intelligence (AI) supercomputers. Overall, popular Chinese concept stocks outperformed the broader market, with three new forces in the car-making industry, collectively known as "Wei Xiaoli," seeing a sharp increase in both year-on-year and month-on-month new car delivery volumes in March. Wei Xiaoli's first car, the SU7, had a hot pre-sale launch, while Xiaomi's US stocks continued to rise sharply intraday after the second round of sales of the Founder's Edition sold out in seconds In the foreign exchange market, with the US dollar strengthening, non-US currencies continued to decline further. The Japanese yen against the US dollar began to approach the key level of 152.00, which market participants see as a possible trigger for Japanese government intervention in the foreign exchange market, approaching the intraday low set before the Japanese Vice Finance Minister warned of action last Thursday, the lowest level since 1990. Bitcoin, which surged over $20,000 in the first quarter, had a rough start in the second quarter, not only falling back below $70,000, but also dropping below $69,000 as the US dollar extended gains during US stock market trading, falling over $3,000 from the daily high to a one-week low.

In the commodity market, the prospect of a Fed rate cut is bullish for gold. Spot gold and New York gold futures both hit new intraday highs, with upward pressure from the US dollar and US bond yields during trading. Although gold continued to hit new closing highs, the price of gold retraced most of its intraday gains, with spot gold briefly turning lower.

International crude oil maintained its gains from last week. Leading indicators for the manufacturing sectors of both China and the US entered expansion territory, boosting the outlook for oil demand. In addition, market expectations that the OPEC+ meeting this week will maintain production cuts, a Ukrainian attack on Russian refineries tightening global supply, and an Israeli attack on the Iranian embassy in Syria have heightened tensions in the Middle East. After the release of US ISM data, oil prices extended their gains, with Brent crude hitting a new high since late October last year following WTI crude.

The three major US stock indices all briefly turned lower, Google rose for the fourth consecutive day to hit a new all-time high, Nvidia fell by over 1% at one point, and Chinese concept stocks rose for the third consecutive day

The three major US stock indices opened with mixed movements, with all falling in early trading. The Dow Jones Industrial Average, which opened slightly higher, quickly turned lower with the decline widening. The S&P 500, which had risen nearly 0.2% at the opening, turned lower about half an hour after the opening. The Nasdaq Composite Index, which had risen nearly 0.7% at the opening, also turned lower towards the end of the morning session. At midday, the Dow fell nearly 320 points, or nearly 0.8%, while the S&P fell nearly 0.5%. The Nasdaq, which had fallen by over 0.3% near midday, briefly turned higher several times, maintaining its upward trend until the close.

In the end, only the Nasdaq closed higher among the three indices, up 0.11% at 16,396.83 points, almost marking two consecutive trading days of decline. The Dow and S&P, which had risen for two consecutive days, fell from their respective closing record highs set last Thursday. The Dow fell 240.52 points, or 0.6%, to 39,566.85 points. The S&P fell 0.2% to 5,243.77 points.

Only the Nasdaq closed higher among the three major US stock indices, with small-cap stocks underperforming the broader market

Small-cap stocks, mainly value stocks, represented by the Russell 2000 index, turned lower early in the session, falling by over 1% at one point and closing down 1.02%, dropping from the closing high set since January 2022 after two consecutive days of gains. The Nasdaq 100 index, dominated by technology stocks, rose over 0.7% in early trading but turned lower in the morning and midday sessions, closing up 0.21%, approaching the closing record high set on March 22; the Nasdaq Technology Market Cap Weighted Index (NDXTMC), which measures the performance of technology sector components in the Nasdaq 100 index, maintained its gains throughout the day, rising by over 1.5% in early trading and closing up 0.79%, rebounding after a retreat last Thursday In the major sectors of the S&P 500, only three sectors closed higher on Monday. The communication services sector where Google is located rose by nearly 1.5%, the energy sector driven by the rise in crude oil increased by nearly 0.8%, and the IT sector where Microsoft and chip stocks are located rose by over 0.2%. Among the eight sectors that closed lower, the real estate sector sensitive to interest rates fell by nearly 1.8%, the copper futures sector rose by less than 0.9%, and the materials sector with the smallest decline fell by less than 0.3%.

Including Microsoft, Apple, Nvidia, Google's parent company Alphabet, Amazon, Meta, and Tesla, the "Big Seven" tech giants had mixed performances during the trading day. Tesla, which performed the worst, initially fell by nearly 3% in the morning session, gradually narrowing most of the decline by midday to close down by 0.3%, marking a second consecutive day of decline.

Among the FAANMG six major tech stocks, Alphabet rose by nearly 2%, marking a fourth consecutive day of gains and hitting a new closing high; Meta rose by nearly 1.2%, rebounding after hitting a low closing level since a four-day decline until March 15; Microsoft rose by 0.9%, recovering from a five-day decline since hitting a low closing level on March 18; Netflix, which had closed lower for two days since March 11, saw an initial rise in trading, closing up by nearly 1.2%; Amazon, which opened lower, fluctuated multiple times during the day after an initial rise of over 1%, closing up by 0.3% and hitting a high closing level for the third consecutive day since November 2021; Apple opened lower and maintained a downward trend throughout the day, falling by over 1% in the morning session and closing down by nearly 0.9%, marking a second consecutive day of decline.

Overall, chip stocks continued to rise, with the Philadelphia Semiconductor Index and the Semiconductor Industry ETF SOXX initially rising by over 2%, closing up by nearly 1.2% and 1.1% respectively, marking a three-day consecutive high since March 12. Among chip stocks, Nvidia initially rose by over 2%, then turned lower towards the end of the morning session, hitting a daily low near midday, dropping by nearly 1.3% during the day, eventually closing slightly higher and roughly flat, showing weak rebound after rising by 0.1% last Thursday; Micron Technology surged by over 6% during the day after Bank of America predicted that demand for HBM technology would exceed $20 billion by 2027, closing up by over 5%; by the closing bell, TSMC's US stock rose by 4%, Western Digital rose by nearly 4%, Broadcom rose by nearly 2%, AMD, Qualcomm, and Arm rose by over 1%, and Intel rose by 0.8%.

AI concept stocks overall declined. By the closing bell, SoundHound.ai (SOUN) fell by over 5%, BigBear.ai (BBAI) and Astera Labs (ALAB), known as "Little Nvidia" and selling data center interconnect chips, fell by over 4%, C3.ai (AI) fell by over 2%, Palantir (PLTR) fell by nearly 0.7%, Adobe (ADBE) fell by 0.5%, Oracle (ORCL) fell by 0.1%, and Super Micro Computer (SMCI) rose by over 2%.

Overall, popular Chinese concept stocks continued to rise. The Nasdaq Golden Dragon China Index (HXC) rose by over 2% at midday, closing up by 1.9%, outperforming the broader market and hitting a high closing level for the third consecutive day since March 21. The Chinese concept ETFs KWEB and CQQQ rose by over 2% and nearly 2% respectively. The three new energy vehicle companies initially surged, then retraced slightly, with Nio, which rose by nearly 5.6% in the morning session, closing up by over 3%, XPeng, which rose by 4% initially, closing up by 1%, and Li Auto, which rose by over 6% initially, closing up by over 1% Among other individual stocks, Xiaomi's single fan initially rose nearly 6.9%, closing up nearly 1.9%. By the closing bell, Baidu rose by 3%, Pinduoduo rose by over 2%, Alibaba and JD.com rose by over 1%, Tencent's single fan rose by 1%, while NetEase fell by over 4% and Bilibili fell by nearly 0.4%.

Banking stocks fell across the board, underperforming the broader market. The overall banking industry index, KBW Bank Index (BKX), which hit a high not seen since March 3, 2023, fell by nearly 1.2%. The KBW Nasdaq Regional Banking Index (KRX), which had risen for two consecutive days to a high not seen since January 30, fell by about 2%. The SPDR S&P Regional Banking ETF (KRE), which had hit a high not seen since January 30 for two consecutive days, fell by nearly 2%.

In terms of volatile individual stocks, after reporting a net loss of $58 million in 2023 with annual revenue of only $4.1 million, Trump Media & Technology Group (DJT), owned by Trump, fell by approximately 21.5% on its fourth day of trading. InterDigital (IDCC) fell by nearly 8.6% after being downgraded from buy to underweight by Bank of America, citing limited long-term growth opportunities. Bill Holdings (BILL), a financial software company, fell by 6.1% after being downgraded to underweight by Wells Fargo, which believed growth expectations for the company were too high. Universal Health Services (UHS), a healthcare company, fell by nearly 4% after disclosing that its subsidiary Pavilion Behavioral Health was ordered to pay $60 million in compensatory damages and $475 million in punitive damages, with a potential "significant adverse impact" on the company's business.

After the ISM data, U.S. bond yields rose by more than 10 basis points during the trading session. U.S. bond yields rose for two consecutive trading days. The yield on the 10-year U.S. Treasury note fell below 4.19% during the Asian session, approaching the low of 4.18% set on Wednesday last week, and rose above 4.20% during the European session. After the U.S. ISM data was released, the increase rapidly expanded, with U.S. stocks breaking above 4.30% in early trading, rising above 4.33% at one point, hitting a high not seen since March 19, with an increase of over 13 basis points during the day, closing at around 4.31% at the end of the bond market session, up by about 11 basis points during the day The 2-year US Treasury yield, which is more sensitive to interest rate prospects, fell below 4.60% during the Asian session, hitting a daily low of 4.5931%. After the release of US ISM data, US stocks also rose in early trading, breaking above 4.70% and reaching above 4.72% at one point, hitting a high since March 19th. The intraday increase slightly exceeded 10 basis points, closing around 4.71% at the end of the bond market session, with an intraday increase of about 9 basis points.

Various maturity US Treasury yields rose by at least 10 basis points during the session.

After ISM data, the US Dollar Index jumps to over a four-month high, the Japanese Yen approaches a low not seen since 1990, Bitcoin falls below $69,000

Tracking the ICE US Dollar Index (DXY) against a basket of six major currencies including the euro, the US dollar fell below 104.50 and hit a daily low during the Asian session, then quickly reversed and maintained an upward trend. After the release of US ISM manufacturing data, the index rapidly expanded its gains, with US stocks rising above 105.00 in early trading and approaching 105.10, hitting a high since November 14, 2023. The intraday increase was nearly 0.6% (closing at 104.487 last Friday).

By the close of the US stock market on Monday, the US Dollar Index was slightly below 105.00, up nearly 0.5% intraday, rebounding after a slight decline over the past two days. The Bloomberg Dollar Spot Index, which tracks the US dollar against ten other currencies, rose nearly 0.3%, reaching a high since February 13th and second only to the level on February 13th this year, also rebounding after a slight decline last Friday.

Among non-US currencies, the Japanese Yen fell for two consecutive days, approaching a low not seen since 1990. The USD/JPY pair approached 151.80 in early US trading, nearing the high near 152.00 set in mid-1990, with an intraday increase of nearly 0.3%, closing above 151.60 at the end of US trading. The EUR/USD pair fell below 1.0730 in early US trading, hitting a low since February 15th, with an intraday decline of nearly 0.6%, closing above 1.0740 at the end of US trading. The GBP/USD pair fell below 1.2540 in early US trading, hitting a low since February 14th, with an intraday decline of nearly 0.7%, closing slightly below 1.2550 at the end of US trading.

In the offshore market, the offshore Chinese Yuan (CNH) hit a daily high of 7.2481 during the Asian session, but accelerated its decline after the release of US ISM data. In early US trading, it hit a daily low of 7.2625, dropping 144 points from the daily high, but still not approaching the intraday low set on November 13, 2023, when it fell below 7.28. At 4:59 am Beijing time on April 2nd, the offshore Chinese Yuan against the US dollar was quoted at 7.2595, up 23 points from the New York closing price last Friday, rebounding after halting a two-day decline last Friday Bitcoin (BTC) rose above $71,000 in the early Asian session, hitting a daily high. In the pre-European stock market, it fell below the $70,000 mark, and in the early US stock market session, it accelerated its decline, dropping below $69,000 and briefly falling below $68,200, hitting a low since Monday, March 25th. It dropped over $3,000 and more than 4% from the daily high, closing above $69,600 in the US stock market, down around 2% in the last 24 hours.

Crude oil rose for the second consecutive day, with Brent crude hitting a five-month high. International crude oil futures rose during the trading session. When the US stock market hit a daily low, US WTI crude oil fell to $82.60, Brent crude fell to $86.40, both dropping nearly 0.7%, but later turned higher. During the US stock market session, US oil surged to nearly $84.50, up over 0.9% intraday, while Brent oil approached $88.00, up more than 1.1% intraday.

Ultimately, crude oil continued its strong rebound from last Friday. WTI May crude oil futures rose nearly 0.65%, closing at $83.71 per barrel, hitting a high since October 27, 2023, set on March 19. Brent June crude oil futures rose over 0.48%, closing at $87.42 per barrel, marking a high since October 27, 2023, for two consecutive trading days.

Gasoline and natural gas futures in the US showed mixed movements. NYMEX May gasoline futures, which rebounded nearly 3% last Thursday, fell nearly 0.4%, closing at $2.71 per gallon, after pulling back from the low since March 13. NYMEX May natural gas futures rose over 2.85%, closing at $1.8370 per million British thermal units, rising for two consecutive days to a high since March 20. The rise in gas prices was driven by the weekend weather forecast showing cold weather at the end of the season, boosting natural gas demand this week, potentially helping offset inventory surpluses.

Gold hit a historical high but gave back more than half of its intraday gains, with spot gold turning lower in the short term.

London base metals were closed on Monday for the Easter holiday.

During the Asian session on Monday, New York gold futures rose to $2,286.40, up over 2.1% intraday, while spot gold rose above $2,265.70, up nearly 1.5% intraday, both hitting a new intraday high since last Thursday. However, in the early US stock market session, gold futures hit a daily low of $2,249.10, up less than 0.5% intraday, and spot gold fell below $2,230, turning lower in the short term.

In the end, both gold futures and spot gold hit record closing highs for three consecutive trading days, rising for five consecutive trading days. COMEX June gold futures rose 0.84%, closing at $2,257.10 per ounce Spot gold was trading above $2240 at the close of the US stock market, with an intraday increase of about 0.5%.

Spot gold had previously risen by over 1% to hit a historical high during the trading session, but retraced all gains after the release of US ISM data