Market Analysis on June 12th

The unexpected cooling of US CPI inflation data has significantly boosted the US stocks. The year-on-year growth of CPI in May slowed to 3.3%, with a zero month-on-month growth, while the core CPI increased by 3.4% year-on-year and 0.2% month-on-month, both showing clear signs of inflation easing. This result has fully absorbed the market's expectations of two interest rate cuts this year. The S&P 500 and Nasdaq indexes hit historical highs for three consecutive days under the influence of this bullish news.

Meanwhile, the Fed stated in its recent meeting that although inflation has cooled somewhat, it remains above target and more positive data is needed to support interest rate cut decisions. Powell emphasized the need for more 'good data,' despite the significant slowdown in inflation. The Fed now expects only one rate cut this year, reducing the previous estimate of three cuts.

In individual stocks, technology stocks driven by the AI boom surged. Nvidia, Microsoft, Broadcom, and Taiwan Semiconductor in the US stock market all hit new highs, with Broadcom surging an additional 10% due to its strong post-market earnings report. After Apple introduced new features at the WWDC conference, its stock price rose by over 7%, briefly surpassing Microsoft as the highest market-cap company, although Microsoft reclaimed the lead later on.

In the fixed income market, after the CPI data release, US bond prices rose sharply, and yields plummeted. The yield on the 10-year US Treasury bond plunged by more than 10 basis points, hitting a two-month low. The US dollar index plummeted after the data was announced, although it had a limited recovery after the Fed meeting.

Crude oil prices have risen continuously for three days during this period, reaching a two-week high. The metal market also performed strongly, with zinc and tin in London rising by over 4%, and copper rising by nearly 2%.

In the china market, the Shanghai Composite Index rose slightly, with strong performance from medical and coal industrial concept stocks. At the same time, with China's CPI growth of only 0.3% in May and a narrowing of the year-on-year decline in PPI, signs of economic stability are evident. Chinese concept stocks in the USA fell slightly after the CPI data was released, but the decline was limited. Offshore renminbi significantly appreciated after the data release, but fell back after the FOMC meeting, reflecting a comprehensive market response to global economic prospects.

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