The S&P 500 hits a 15-month high, with Chinese concept stocks leading for three consecutive days, and offshore RMB approaching 7.16 yuan.

US inflation cooled significantly, with June CPI increasing by 3% YoY, the lowest in over two years since March 2021, significantly weaker than the previous reading of 4%. Core CPI increased by 4.8% YoY, the lowest since October 2021, weaker than the previous reading of 5.3%, and both were lower than expected.

As core inflation still far exceeds the Federal Reserve's target of 2%, the market's bet on a 25 basis point rate hike by the Fed in July has risen to 95%. However, the swap market believes that the probability of another rate hike by the Fed after July is much lower than 50%, and risk assets have surged.

The latest Beige Book released by the Federal Reserve states that labor demand has remained healthy since the end of May, and price increases in some regions have slowed down. Overall economic activity in the United States has increased slightly.

Neel Kashkari, a voting member of the Federal Open Market Committee and President of the Minneapolis Fed, said that entrenched inflation could prompt the Fed to further raise interest rates. The banking industry must be prepared in advance for this, as rising interest rates will bring more pressure to banks, and a replay of the March crisis cannot be ruled out.

The Bank of Canada raised interest rates by 25 basis points as scheduled, pushing the expected return of CPI to the central bank's target back to mid-2025. The Governor of the Bank of Canada admitted that not raising interest rates temporarily had been discussed, but believed that the cost of delaying rate hikes was too high and would raise rates again if necessary.

The Reserve Bank of New Zealand kept interest rates unchanged at 5.5%, the first pause in rate hikes since October 2021. The bank believes that the current level of interest rates is sufficient to restrain spending and inflationary pressures, and interest rates need to "remain at a restrictive level in the foreseeable future."

According to Xinhua News Agency, the European Parliament has passed the "Chip Act," which requires the EU's share of global chip production to increase from the current 10% to 20% by 2030. It will also establish a crisis response mechanism to assess the risks faced by the EU's semiconductor supply.

Nasdaq rises over 1%, reaching the highest level since April last year, and Chinese concept stocks rise over 3%, leading the gains for three consecutive days.

On Wednesday, July 12th, the unexpected cooling of US CPI inflation triggered a rally in risk assets in Europe and the United States.

US stocks opened significantly higher, with the Dow rising more than 130 points at the opening, and then quickly expanding to over 320 points or a 1% increase. The S&P 500, Nasdaq, and Russell small-cap stocks all rose more than 1%, with the S&P reaching the highest level since April last year.

Dow components JPMorgan Chase and Visa reached their highest levels since February last year and August 2021, respectively. Among the S&P 500 constituents, 56 stocks hit a 52-week high, and Mastercard reached its highest level since April 2021. American Airlines reached its highest level since May last year.

Afternoon trading saw the gains in US stocks narrow, but they still closed higher for the third consecutive day. The S&P and Nasdaq remained at their highest levels in 15 months since early April last year, and the Dow was close to recovering from last Monday's decline. The Russell small-cap stocks rose for the fourth consecutive day, reaching a five-month high since February 17th:

The S&P 500 rose 32.90 points, or 0.74%, to close at 4472.16. The Dow rose 86.01 points, or 0.25%, to close at 34347.43. The Nasdaq rose 158.26 points, up 1.15%, to 13,918.96. The Russell 2000 small-cap index rose 1.05%, the Nasdaq 100 rose 1.24%, reaching its highest level since January last year.

The Nasdaq rose more than 1%, the Dow rose more than 300 points at the beginning of the session, and the Chinese concept stocks rose more than 3%, leading the way with strong performance.

All 11 sectors of the S&P rose, with the telecommunications services sector up 1.5%, utilities, materials, and information technology/technology all up at least 1.25%, consumer discretionary and energy up at least 0.9%, and industrial and healthcare sectors down by a maximum of 0.28%.

Wall Street analysts are optimistic about the latest CPI data, believing that the slowdown in employment and inflation, rather than collapse, is a sign of an economic soft landing. JPMorgan Chase referred to the market as entering a "golden girl" state of economic growth, rebounding corporate profits, and normalizing inflation.

Tech stocks are rising together. "Metaverse" Meta rose nearly 4% to its highest level in 18 months. Apple rose 0.9% off its two-week low, Microsoft rose 1.4%, and Amazon rose 1.6%, further distancing itself from its three-week low. Google Class A shares rose 1.5%, rebounding from a two-month low for the second consecutive day. Netflix rose 0.9%, approaching its highest level in 17 months. Tesla rose 0.8%, rising for the second consecutive day from its low point this month.

Chip stocks rebounded simultaneously. The Philadelphia Semiconductor Index rose 1.9%, breaking through 3,700 points and rising for four consecutive days to a one-month high. AMD rose nearly 3%, and Intel rose 2%, both further distancing themselves from their lows this month. NVIDIA rose 3.5% to a three-week high.

Most AI concept stocks rose. C3.ai fell 3% from a three-week high, while Palantir Technologies rose another 0.8% to a one-month high. SoundHound.ai and BigBear.ai both rose 2%, both rebounding from lows of over three weeks.

In terms of news, accounting firm KPMG signed a major AI deal with Microsoft, investing $2 billion over five years. UBS raised Netflix's target price before next Wednesday's earnings report, suggesting it could rise another 20%. Amazon Prime Day's 24-hour online sales increased by 6% compared to the same period last year. Wall Street is optimistic about Meta's Threads application, which is expected to seize advertising potential from Twitter. Musk established the AI company xAI, targeting ChatGPT, and revealed more details on Friday. Intel CEO Pat Gelsinger visited China. The U.S. Federal Trade Commission (FTC) plans to appeal the U.S. court ruling allowing Microsoft's acquisition of Activision Blizzard. NVIDIA may be a major investor in ARM's IPO. Chinese concept index leads for three consecutive days, ETF KWEB rises more than 4%, CQQQ rises more than 3%, Nasdaq Golden Dragon China Index (HXC) rises 3.4%, breaking through 7000 points for the first time since June 16.

Among the Nasdaq 100 constituents, JD.com and Baidu rose nearly 4%, Pinduoduo rose 6%. Among other individual stocks, Alibaba rose 2.4%, Tencent ADR rose 4%, Bilibili rose nearly 8%, EHang Holdings rose 19%, Yixian E-commerce rose 10%, iQiyi rose 9%. NIO and Li Auto rose 3%, Xpeng Motors rose more than 1%. EHang Holdings rose 19%, Yixian E-commerce rose 10%, iQiyi rose 9%.

On the news front, Alibaba announced the launch of the multi-platform DAAS product "Antelope One," which will soon be integrated with large models. NIO announced that Abu Dhabi investment firm CYVN Holdings has completed a strategic equity investment in NIO.

Regional bank stocks rise 2%, reaching a four-week high. The industry benchmark Philadelphia Stock Exchange KBW Bank Index (BKX) rose more than 1% to its highest level in nearly three months, having hit its lowest level since October 2020 on May 4. The KBW Nasdaq Regional Banking Index (KRX) hit its lowest level since November 2020 on May 11; the SPDR S&P Regional Banking ETF (KRE) hit its lowest level since October 2020 on May 4.

The "Big Four" U.S. banks rose by about 1%, with Citigroup, which is about to release its earnings report, leading the way with a 2% increase. Key regional banks rose together, with PacWest Bancorp rising more than 1%, and Western Alliance Bancorp, Comerica, Zions Bancorporation, and Keycorp all rising by about 3%.

Analysts believe that heavyweight banks such as JPMorgan Chase, Citigroup, and Wells Fargo will kick off the U.S. stock market's second-quarter earnings season this week. Due to the increase in interest payments offsetting the sluggish trading volume in the rising interest rate environment, it is expected that the overall U.S. banking industry will report higher profits.

Other stocks with significant changes include:

Artificial intelligence drug development biotech company Recursion Pharmaceuticals soared 160% in pre-market trading and closed up 115% at a year-and-a-half high. It will collaborate with NVIDIA and receive a $50 million investment to accelerate the development of biological and chemical AI basic models.

Domino's Pizza rose 11% to a seven-and-a-half-month high and reached a delivery agreement with Uber in the U.S., UK, and Canada markets. U.S. photovoltaic leader SunPower rose more than 8% to a three-week high. Raymond James rated it as "strong buy" and predicted that the stock price would double.

U.S. automotive parts company Holley Inc. rose more than 21% to a ten-month high. Bank of America upgraded its rating to "buy" and is optimistic about the double improvement in sales momentum and procurement conditions.

Luxury electric vehicle manufacturer Lucid fell nearly 12%, breaking away from its three-month high. Second-quarter deliveries remained flat compared to the first quarter and significantly lower than expected, triggering concerns about demand.

The unexpected cooling of US inflation ignited speculation in the market about the Federal Reserve nearing the end of its rate hike cycle. Traders responded by lowering their bets on rate hikes by the European and British central banks. European stocks collectively rose by over 1%, with the UK and Italy leading the way with a 1.8% increase in their respective stock indices. Italian stocks reached a new 15-year high.

The pan-European Stoxx 600 index rose by 1.51%, and the Euro Stoxx 50 index rose by 1.72%, both reaching a one-week high after four consecutive days of gains. Mining stocks led the way with a 3.7% increase. UK bank stocks rose as the latest stress tests conducted by the central bank indicated that the eight major banks have sufficient capital to withstand an economic crisis worse than the one in 2008. Italian bank stocks rose by 1.6%.

US Treasury Yields Fall by Over 10 Basis Points, 2-Year UK Bond Yields Plummet by 20 Basis Points

The CPI data led the market to believe that the July rate hike would be the last of the current cycle by the Federal Reserve. As a result, US Treasury yields experienced a significant drop of over 10 basis points, with short-term bond yields, which are more sensitive to monetary policy, experiencing particularly sharp declines.

The 2-year US Treasury yield fell the most, dropping by 18 basis points to less than 4.72%, essentially erasing the gains made since June 29. The 10-year benchmark bond yield fell by 14 basis points to 3.84%, further distancing itself from the 4% threshold and reaching a one-week low after three consecutive days of decline.

US Treasury Yields Fall by Over 10 Basis Points, Short-Term Bond Yields Experience More Severe Declines

The weakening of US CPI weakened investors' expectations for rate hikes by major central banks in Europe and the US, leading to a decline in European bond yields. The market expects the year-end benchmark interest rate for the European Central Bank to be below 4%, and the Bank of England's interest rate to peak at 6.37% by March next year, a decrease of 12 basis points from Tuesday's expectations.

The 10-year benchmark German bond yield fell by over 7 basis points to a one-week low, further distancing itself from a four-month high. The 2-year yield fell by 9 basis points to a daily low of 3.224%, after reaching a 15-year high of 3.393% last week.

The 10-year UK bond yield fell by 15 basis points to a daily low of 4.509%, and the 2-year yield, which is more sensitive to monetary policy, plummeted by 20 basis points to a daily low of 5.226%. The degree of inversion in the yield curves of key bonds in Europe and the US has narrowed.

Oil Prices Rise by Approximately 1% to the Highest Level Since the End of April, Brent Crude Surpasses $80 for the First Time Since May 1, European Natural Gas Falls by Over 10%

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Oil prices, as risky assets, rose more than 1%, with Brent crude surpassing the psychological level of $80 per barrel for the first time since May 1st. In addition, the price of Russia's flagship Urals crude oil exceeded the G7's upper limit of $60 for the first time.

WTI crude oil futures for August rose by $0.92, or 1.23%, to $75.75 per barrel, reaching a daily high of $76, the highest since April 28th, with a two-day consecutive increase.

Brent crude oil futures for September rose by $0.71, or 0.89%, to $80.11 per barrel, reaching a daily high of $80.20, the highest closing price since April 25th, with a two-day consecutive increase.

rose by about 1% to the highest level since the end of April, and Brent crude oil surpassed $80 for the first time since May 1st.

Despite the record-high utilization rate of US refineries since June last year, US EIA crude oil inventories increased by nearly 6 million barrels last week, contrary to expectations, and gasoline inventories decreased by only 4,000 barrels, raising concerns about demand.

However, the weakening of the US dollar boosted oil prices, and Wall Street remains optimistic about the demand prospects brought by China's monetary stimulus plan. The US Energy Information Administration (EIA) and the International Energy Agency (IEA) have both predicted that market supply will continue to tighten until 2024, especially in the second half of this year.

TTF Dutch natural gas futures in Europe fell more than 10% at the end of the day, further away from 30 euros per megawatt-hour. On Monday, it fell below this psychological level for the first time since June 13th. ICE UK natural gas has fallen for at least three consecutive days and fell by 2% on Wednesday.

The US dollar index fell more than 1%, breaking below 101 to a three-month low, and the offshore renminbi rose by 500 points and surpassed 7.17 yuan.

The market is betting that the Fed's interest rate hike cycle is nearing its end. The DXY, which measures the US dollar against six major currencies, fell by 1.2% and broke below the 101 level, hitting a three-month intraday low since April 17th. Bloomberg's US dollar index reached a 14-month low.

The US dollar index hit the deepest decline in January, and Bloomberg's US dollar index hit the lowest level since April last year.

Non-US currencies rose across the board. The euro against the US dollar rose more than 1% and broke above 1.11, reaching the highest level since March last year. The pound against the US dollar touched the 1.30 level for the first time since April last year, hitting a 15-month high for two consecutive days. Non-US currencies have risen across the board. The euro rose more than 1% to its highest level since March last year.

The Swiss franc rose 1.5% against the US dollar to its highest level since 2015, while commodity currencies such as the Australian dollar and the New Zealand dollar both rose 1.5% against the US dollar. The Japanese yen rose 1.6% against the US dollar and broke through the 140 and 139 levels, reaching its highest level since May 22, with a cumulative decline of over 4% in the past five days.

Some analysts believe that the market expects the Bank of Japan to announce changes to its ultra-low interest rate policy in July, and the yen exchange rate has risen above the 140 level for the first time in a month. The offshore renminbi approached 7.16 yuan, up nearly 520 points from the previous day's closing, reaching its highest level since June 20.

Mainstream cryptocurrencies have mixed performance. Bitcoin, the largest cryptocurrency by market capitalization, briefly rose 1% and approached $31,000 after the release of CPI data, while US stocks turned lower but remained above $30,000. The second largest cryptocurrency, Ethereum, rose nearly 1% and approached the $1,890 level.

Bitcoin approached $31,000 after the release of CPI data, and then turned lower.

Gold rose more than 1% to a four-week high, silver rose 4% , industrial metals surged, copper rose more than 2% , nickel rose nearly 5%

The unexpected cooling of US inflation has fueled market speculation of a faster pause in interest rate hikes by the Federal Reserve, causing both the US dollar and US bond yields to plummet, supporting the upward trend of gold prices from Tuesday. COMEX August gold futures closed up 1.27% at $1,961.70 per ounce.

Spot gold rose more than $27 or 1.4% from the previous day's closing, attempting to break through the $1,960 level, reaching a four-week high since June 16. Some analysts believe that if the gold price breaks through the 50-day moving average of $1,960, it will trigger more bullish bets.

Spot silver rose 4% and broke through $24 per ounce. COMEX August silver futures closed up 4.42% at $24.185 per ounce.

Gold rose more than 1% to a four-week high, and silver rose 4%.

The weakening of the US dollar and the prospect of a demand recovery led by China have boosted the commodity market. London industrial metals have surged across the board:

Copper in London rose nearly $180 or 2.1% to a three-week high of $8,500, and the reduction of LME warehouse inventories by 45% since early June has also supported prices. London aluminum rose more than 3% and broke through $2,200, reaching a three-week high, far from the nearly one-year low since September last year.

London zinc rose 3% and broke through $2,400, reaching a three-week high. London lead rose 1.7% and held above $2,000, reaching a monthly high. London nickel rose nearly $1,000 or 4.7%, rising to $21,000, the highest in three weeks. London tin rose more than $1,100 or 4%, consecutively breaking through the two thresholds of $28,000 and $29,000, reaching the highest level in nearly six months since January.

Chicago corn futures fell 3.7% and entered a bear market, hitting the lowest level since 2021, as the USDA monthly report showed record-high harvest in the United States. Bloomberg Grains Index fell 3%, U.S. wheat futures fell 4%, and soybeans fell more than 2%.