US PPI unexpectedly drops, S&P Nasdaq hits new highs for four consecutive days, Apple surpasses Microsoft in market value, US bond yields at a ten-week low

The U.S. May PPI data released before the U.S. stock market opening was lower than Wall Street's expectations, adding to the interest rate cut optimism. The U.S. May PPI MoM -0.2% marked the largest decline in seven months, with the report also showing that the May core PPI growth was lower than expected at 0.3%, indicating a moderation in inflationary pressures. Additionally, the initial jobless claims data released on the same day rose to the highest level in nine months, further cooling the labor market and signaling slow economic growth in the U.S.

Commentators noted that this month's data strengthens the confidence in an interest rate cut, but the rate cut still needs to wait for signs of relaxation in some more sticky components before it can begin. UBS economists have pushed back their expectations for the timing of the Fed's first rate cut from September to December. While inflation cools down, the Fed maintains a slightly hawkish stance, continuing to fulfill its role of "stabilizing market volatility," possibly also in consideration of the November U.S. elections. Following the PPI data release, the money market now expects two 25 basis point rate cuts by the end of the year, higher than the 44 basis points expected before the data release. The CME FedWatch Tool shows a close to 70% probability of a 25 basis point rate cut in September.

In terms of market reaction, large-cap tech stocks and bonds benefited the most. The S&P 500 index and the tech-heavy Nasdaq hit new closing highs again. After the data release, U.S. Treasuries quickly strengthened, with bond yields plunging and strong performance in the 30-year bond auction. The U.S. dollar weakened in the short term but rebounded towards the end of the session. The warming rate cut expectations did not support precious metals, as gold and silver prices fell, while London industrial metals generally declined. Oil prices rose slightly, closing nearly flat.

In Japan, the market generally expects the Bank of Japan to keep its current policy rate unchanged at the end of the two-day monetary policy meeting scheduled for this Friday. The short-term interest rate target is expected to remain at the level of 0.0% to 0.1%. Market forecasts show a high probability of 91% for unchanged rates, with only a 9% chance of a 10 basis point rate hike. Market focus will also shift to the government bond purchase program, as media reports suggest that as the Bank of Japan gradually normalizes its policies, it may evaluate the need to reduce the monthly purchase of around 6 trillion yen in government bonds.

Furthermore, French President Macron stated that he will continue to serve as president until 2027.

S&P 500, Nasdaq Hit New Highs Again, Apple's Market Cap Surpasses Microsoft, Broadcom Rises Over 12% Leading Chip Stocks

On Thursday, June 13, the unexpected decline in the U.S. May PPI supported rate cut expectations. The major U.S. indices opened lower, with the Dow briefly turning higher in the final trading hours before reversing lower again. The S&P 500 index opened higher, led by tech stocks in the Nasdaq, which turned lower at midday but then rebounded, continuing to rise and hitting new daily highs. The Russell small-cap index maintained a downward trend throughout the day, with the deepest decline exceeding 1.5%, while the Nasdaq showed the largest relative increase among the major indices At the close, the S&P 500, Nasdaq, and Nasdaq 100 hit new historical highs again, while the Dow Jones Industrial Average fell for the third consecutive day:

The S&P 500 index rose by 12.71 points, up 0.23%, to 5433.74 points. The Dow Jones fell by 65.11 points, down 0.17%, to 38647.10 points. The Nasdaq rose by 59.12 points, up 0.34%, to 17667.56 points.

The Nasdaq 100 rose by 0.57% to a new high. The Nasdaq Technology Index, which measures the performance of Nasdaq 100 technology component stocks, rose by 1.09% to a new high. The Russell 2000 small-cap stocks fell by 0.88%, and the "fear index" VIX fell by 0.83%, closing below the 12 mark for the first time since May 24.

Looking at industry indices, the Nasdaq Technology Index rose by about 1.1%. The Nasdaq Biotechnology Index fell by 0.15%. The Philadelphia Semiconductor Index rose by 1.48%. The industry benchmark Philadelphia Stock Exchange KBW Bank Index fell by 0.53%. The Dow Jones KBW Regional Bank Index fell by 1.56%.

Technology stocks surged, driving the Nasdaq and S&P to new highs again, with major indices falling in unison before midday, with small-cap stocks and the Dow weak.

Star tech stocks had mixed performances, with Apple topping the global market value rankings. Apple rose by 0.55%, continuing to hit a new closing high, with a market value of approximately $3.285 trillion, surpassing Microsoft once again. NVIDIA rose by over 3.5%, chasing after these two companies. In the past three trading days, Apple has risen by 10.94%, achieving its best performance since 2020. Microsoft rose by 0.12%, with a closing market value of $3.281 trillion, Tesla rose by 2.92%; while Meta fell by 0.93%, Google A fell by 1.48%, and Amazon fell by 1.64%.

NVIDIA once again led multiple chip stocks to new highs. The Philadelphia Semiconductor Index rose by 1.5%, hitting a new high for the fourth consecutive day, and the industry ETF SOXX also rose by 1% to a new high. NVIDIA rose by 3.5% to a new high, with a market value of $3.19 trillion ranking third in the U.S. stock market. The NVIDIA double long ETF rose by 6.8% to a new high, AMD fell by 1.8% and then closed down by 0.2%, hovering near a one-month low; TSMC's U.S. stock rose by 0.2%, Qualcomm rose by over 1%, Broadcom rose by over 12%, Micron Technology by 1.7%, all hitting new historical highs. However, Intel fell by about 1%, Applied Materials fell from its high.

AI concept stocks generally fell. CrowdStrike fell by over 1%, Oracle fell by 0.4%, both moving away from historical highs, SoundHound.ai fell by 0.7%, BigBear.ai fell by over 2%, C3.ai fell by over 3%, Snowflake fell by over 3% hitting a 17-month low, Palantir fell by over 2%, but Dell rose by over 2%, AMD rose by over 12% to a two-week high On the news front, Broadcom rose 16% intraday, marking its largest increase in four years. Its second-quarter performance exceeded expectations and raised its full-year guidance, announcing a 1-for-10 stock split plan. NVIDIA's global independent graphics card market share rose to 88% in the first quarter. Musk stated that Tesla shareholders will approve his $56 billion compensation plan. Reports indicate that OpenAI's annualized revenue doubled to $3.4 billion in the past six months compared to the end of last year, with Microsoft taking a cut from OpenAI's AI model sales, and Apple paying OpenAI through distribution assistance rather than cash.

Chinese concept stocks narrowed their gains after midday. ETF KWEB rose by 0.7%, CQQQ rose by 0.5%, the Nasdaq Golden Dragon China Index (HXC) opened high by 1.3% but closed up by 0.3%, still hovering near a seven-week low, briefly rising above 6200 points at the opening.

Among popular stocks, JD.com fell by 0.5%, Baidu initially rose by over 2% but then fell by 0.4%, Pinduoduo nearly erased a 1% gain. Alibaba dropped by nearly 1%, Tencent ADR rose by 1.4%, the Bilibili platform for the mobile game "Three Kingdoms: Strategy to Rule the World" surged by over 13% and closed up by 7.7%, new energy vehicle stocks opened with a gap up, Nio rose by 3.6% but then fell by 0.9%, Li Auto rose by 4.7% and closed up by 2.5%, XPeng rose by 2% but then fell by 1.5%.

Retail investors' favorite stock, Game Station, experienced significant volatility over the past week, dropping nearly 40% last Friday, another 12% on Monday, rising nearly 23% on Tuesday, dropping over 16% on Wednesday, and surging over 14% on Thursday, with a slight increase for the week. On Wednesday, the trading volume of the same bullish options held by "Retail Leader Big Brother Roaring Little Cat" was more than nine times the usual, causing a 40% drop in the prices of these options contracts, leading to an accelerated decline in GME's stock price.

In addition, space tourism company Virgin Galactic fell by over 14% to a historic low, dropping over 16% at one point during the day, remaining below $1 per share since June, with the board approving a 1-for-20 reverse stock split plan.

European stocks returned to a downtrend. The pan-European Stoxx 600 index fell by 1.31%, hitting a two-week low since May 29, with auto stocks leading the decline by over 2%, falling to a four-month low, the Euro Stoxx 50 blue-chip index and national stock indices in Germany, France, and Italy all fell by about 2%, with the French index hitting a four-month low and the German index falling below the 50-day moving average key technical level.

Rising rate cut expectations push US bond yields to ten-week lows, French-German bond yield spread at widest in seven years

Unexpected cooling of inflation sparks rate cut expectations, leading to a consecutive two-day decline in US bond yields. The bid yield for the 30-year US Treasury auction was lower than the pre-issuance trading level, stimulating further price increases and yield declines The two-year US Treasury yield, which is more sensitive to monetary policy, fell by more than 8 basis points to 4.66%, breaking through the key level of 4.70% at the close, hitting a ten-week low since April 5th. The 10-year Treasury bond yield dropped by 7 basis points to less than 4.22%, hitting the lowest level in nearly two and a half months since April 1st.

Expectations of interest rate cuts have pushed US bond yields to hit a ten-week low continuously.

The 10-year German bund yield, a European benchmark, fell by 6 basis points to 2.47% at the close, with a cumulative decline of 20 basis points in the past three trading days. The 10-year French bond yield continued to rise by 2.5 basis points, leading to a spread of 70 basis points between French and German bond yields, the widest in seven years since 2017, highlighting risk aversion sentiment. The poor performance of German bond yields is related to MSCI's exclusion of EU bonds from government bond indices.

The spread between French and German bond yields hits a seven-year high.

The US Dollar Reaches Above 105, Approaching a Four-Week High, Euro Trading at a Six-Week Low, Bitcoin Falls by Over 2%, Breaking Below $67,000

The US Dollar Index (DXY), which measures against a basket of six major currencies, fell to a daily low after the PPI data, but US stocks turned higher during the session, rising by up to 0.6% and surpassing the 105 level, erasing most of yesterday's losses and approaching a four-week high.

Some analysts believe that the rise in the US dollar is mainly due to the Fed's expectation of only one interest rate cut this year, but lower-than-expected US inflation data has dampened some of the dollar's strength. Yesterday's CPI data caused the dollar to drop by 1%, with the decline narrowing at the close but still marking the largest two-week decline.

After the PPI data, the US dollar first fell and then rose, but still significantly lower than the level before the CPI announcement.

The Euro fell by over 0.6% against the US dollar and dropped below 1.08 again, trading at a near six-week low, after hitting the largest single-day gain of the year yesterday. The British Pound fell by 0.3% against the US dollar and dropped below 1.28 again, creating some tension ahead of the UK general election on July 4th.

The Japanese Yen slightly declined against the US dollar and hovered around the 157 level, trading at a one-week low, after hitting a sixteen-year low against the British Pound overnight, as the market awaits the Bank of Japan's decision on bond purchases on Friday. The offshore Chinese Yuan against the US dollar briefly approached 7.26 before the US stock market opened, then slightly turned lower during the session and tested below 7.27, approaching the monthly low again Mainstream cryptocurrencies fell together. The largest market cap leader Bitcoin fell by 2% and broke through $67,000, returning to a three-week low. The second largest Ethereum also fell by over 2% and broke through $3,500, hitting a three-week low since mid-May.

Bitcoin fell by over 2% to a three-week low of $67,000

U.S. inflation cools down, Russia promises to cut oil production, OPEC's remarks boost oil demand expectations, and oil prices rise slightly by over 0.1%

WTI July crude oil futures closed up $0.12, up more than 0.15%, at $78.62 per barrel. Brent August crude oil futures closed up $0.15, up 0.18%, at $82.75 per barrel.

U.S. WTI crude oil rose by $0.54 or 0.71% at its highest point during the session, briefly breaking through $79, while international Brent rose by $0.45 or 0.54%, briefly returning above $83, but oil prices accelerated their decline after the close.

Oil prices fluctuated sideways, closing almost flat

Analysis indicates that the unexpected drop in U.S. PPI further proves that inflation pressure is easing, paving the way for the Fed to cut interest rates, stimulate the economy, and oil consumption.

Secondly, OPEC Secretary-General published a rebuttal to the International Energy Agency's (IEA) pessimistic monthly report on Thursday. Previously, the IEA report was bearish on the oil market, believing that global oil demand would peak around 2029. Following this, the OPEC Secretary-General criticized the IEA's views as misleading consumers and causing volatile fluctuations in the oil market. He emphasized that there are still billions of people globally without access to energy, and oil demand will continue to grow.

Furthermore, the Russian Ministry of Energy announced on Thursday that following a slight over-fulfillment of production targets under the OPEC+ agreement in May, Russia expects to achieve its oil production quota in June. The department pointed out that the issue of overproduction in May will be resolved through production adjustments in June to ensure the targets are met. Additionally, according to a decree published on the Russian government's legal database, Russian President Putin will not sell crude oil and oil products to foreign buyers who comply with international price limits, extending this ban until December 31, 2024.

U.S. July natural gas futures fell by over 2.82%, closing at $2.9590 per million British thermal units. The U.S. Energy Information Administration (EIA) released its weekly natural gas inventory report, stating that U.S. natural gas inventories increased by 74 billion cubic feet last week, a week-on-week growth of 2.55% (compared to 3.51% the previous week), reaching 29.7 trillion cubic feet

Gold futures fell nearly 1.5%, silver fell over 4% breaking below $30, London copper fell 1.5%, nickel fell 2.3%, zinc and tin fell by about 1.1%

PPI data failed to support the rise of precious metals. COMEX August gold futures fell by about 1.49% to $2319.7 per ounce. COMEX July silver futures fell by 4.04% to $29.045 per ounce, breaking below the $30 mark.

Spot gold fell by nearly $27 or about 1.2%, briefly breaking below the $2300 per ounce level. Spot silver fell by over 3.6% and broke below the $29 mark.

Despite a slight cooling in inflation in May, gold prices fell on Thursday. Tai Wong, an independent metal trader in New York, stated that this week, despite positive data, gold failed to maintain its upward momentum, indicating widespread profit-taking. Chinese buying interest may return at lower price levels, with no specific price identified yet, but purchases have not been made above $2300.

Gold price continues to decline

London industrial base metals generally fell:

Dr. Copper, an economic indicator, fell by $150, a drop of nearly 1.51%, to $9794 per ton. London nickel fell by over 2.30% to $17645 per ton. London tin fell by 1.71% to $32794 per ton. London zinc fell by over 1.17% to $2860 per ton. London aluminum fell by $18 to $2557 per ton. London lead fell by $7 to $2166 per ton.

In addition, domestic black commodity futures rose during the night session, with asphalt, fuel, caustic soda, and glass rising by up to 0.61%, coking coal rising by 0.68%, and coke rising by 2.1%. International copper night trading fell by 0.86%, Shanghai nickel fell by 1.40%, and Shanghai tin fell by 1.62%