U.S. inflation cooled and AI trading rekindled. U.S. stocks rose early in the session, with ASML rising about 3% and oil prices rising 1%
U.S. inflation data was lower than expected, coupled with renewed enthusiasm for AI trading, the U.S. stock technology sector collectively strengthened. On Wednesday, the three major U.S. stock indexes all rose in early trading, with the Nasdaq rising 0.6%, the S&P 500 rising 0.35%, and the Dow Jones Industrial Average rising 0.2%. In terms of individual stocks, ASML rose by about 3%, continuing the positive momentum of performance; Alibaba rose by about 4%, and Apple rose by about 1%. On the news, seven generative AI services including Apple’s Apple Smart have completed domestic registration, and the Alibaba Qianwen large model will be integrated into Apple Smart as an AI capability. The cooperation between the two parties has benefited the stock price performance. At the same time, individual stocks were clearly differentiated: SK Hynix fell about 7%, and then took profits after rising more than 27% the previous day; Morgan Stanley fell about 2%, and the market reacted cautiously to its second-quarter financial report, which put some pressure on the financial sector. The continued escalation of the situation in the Middle East has cast a shadow on the market recovery. Trump issued further military threats against Iran, and the United States resumed the blockade of the Strait of Hormuz against Iranian ships on the same day. International benchmark Brent crude oil rose 1% to US$85.22 a barrel, after soaring 11% in the previous two trading days. Higher energy prices have triggered uncertainty about the outlook for inflation, making it difficult to fully restore market risk sentiment. Federal Reserve Chairman Warsh reiterated his stance on fighting inflation when testifying before Congress, saying that June's inflation data was better than expected, but it was still far from the target and "there is still a lot of work to be done." The three major U.S. stock indexes all rose in early trading, with the Nasdaq rising 0.6%, the S&P 500 rising 0.35%, and the Dow Jones Industrial Average rising 0.2%. At the beginning of the U.S. stock market, ETFs in major industries had mixed gains and losses. The Internet Stock Index ETF rose by more than 1%, the Consumer Discretionary ETF rose by nearly 1%, and the Biotechnology ETF fell by nearly 1%. The Nasdaq China Golden Dragon Index rose by more than 2%, Alibaba rose by about 6%, Beike rose by about 7%, Bilibili rose by about 4%, and Xpeng Group rose by about 4%. The European Stoxx 50 index opened up 0.2%, Germany's DAX index fell 0.7%, Britain's FTSE 100 index fell 0.5%, and France's CAC 40 index fell 0.1%. ASML shares rose 7%. The company's Q2 performance exceeded expectations and it raised its full-year performance guidance. The Korea Composite Stock Price Index (KOSPI) rose 6.2% on Wednesday to 7284.41 points. SK Hynix rose about 9%, Samsung Electronics rose about 6%, and Hanmi Semiconductor rose about 30%. The Nikkei 225 closed up 1.5% at 68,751.51 points; the Topix rose 1.2% at 4,088.12 points. The U.S. dollar spot index fell 0.1%. The yield on the 10-year U.S. Treasury note was little changed at 4.59%. Spot gold rose nearly 2% to $4,065 an ounce. International benchmark Brent crude oil rose 0.8% to US$85.41 a barrel, after soaring 11% in the previous two trading days. ASML's better-than-expected results ignited market sentiment, U.S. stocks opened higher The three major U.S. stock indexes all rose in early trading, with the Nasdaq rising 0.6%, the S&P 500 rising 0.35%, and the Dow Jones Industrial Average rising 0.2%. ASML rose about 3%, continuing its positive performance momentum. ASML's net sales in the second quarter reached 9.33 billion euros, exceeding analysts' average forecast of 8.85 billion euros; net profit was 2.92 billion euros, also higher than market expectations of 2.64 billion euros. Gross profit margin was recorded at 54%, which was also better than the expected 52%. The Korea Composite Stock Price Index (KOSPI) surged 6.2% on Wednesday to 7,284.41 points, regaining the title of best-performing global major stock index during the year. SK Hynix rose about 9%, Samsung Electronics rose about 6%, and Hanmi Semiconductor rose about 30%. The semiconductor sector was the biggest highlight of the day. The benchmark index of Asian semiconductor stocks rose 3.5% in a single day. Just three days after its listing, the premium of SK Hynix’s American Depositary Receipts (ADRs) over Seoul-listed stocks once exceeded 50%.
"Volatility has subsided and we are seeing some covering buying in the chip sector," said Kazuhiro Sasaki, head of research at Phillip Securities Japan. He also pointed out, "This is not so much a return of technology stocks as it is a continuation of sector rotation - bank stocks are quite attractive, especially after the U.S. banking industry delivered outstanding results." In Japan, the Nikkei 225 Index closed up 1.5% at 68,751.51 points; the Topix Index rose 1.2% at 4,088.12 points. Dollar weakens for second day as cooling inflation undermines interest rate hike expectations U.S. inflation data released on Tuesday came in lower than expected, dimming bets on the Federal Reserve raising interest rates this month. The Bloomberg Dollar Index fell for a second consecutive day, with interest rate-sensitive two-year U.S. Treasury yields stabilizing after falling 9 basis points on Tuesday, while Japanese and Australian sovereign bonds also recorded gains. Tiffany Wilding, an economist at an investment management company, said that "the lower-than-expected CPI data is a big relief" and that the report "although will not completely eliminate the discussion of further interest rate hikes, it should actually rule out the possibility of a July interest rate hike." High oil prices and risks in the Middle East pose inflationary risks Despite the strong performance of the technology and financial sectors, tensions in the energy market still unnerved investors. Brent crude oil rose for the third consecutive day, with both the U.S. and European refined oil markets showing historic tensions. Further deterioration of the situation in the Middle East may bring a greater impact on oil prices to consumers who are already under pressure. Garfield Reynolds, a Bloomberg strategist and head of the MLIV Asia team, noted that "refined oil futures have risen much more than crude oil, which means that investors are overly optimistic about pricing in a rapidly fading energy supply shock this year, especially in the context of the recent escalation of the U.S.-Iran conflict. Investors have been inclined to bet that the impact of war in the Middle East and Europe is only temporary, a dynamic that will continue to plague equity, credit and bond markets." Rajeev De Mello, global macro portfolio manager at GAMA Asset Management, said, "The ongoing conflict in the Middle East remains the main constraint on the overall improvement in market risk sentiment."
"Volatility has subsided and we are seeing some covering buying in the chip sector," said Kazuhiro Sasaki, head of research at Phillip Securities Japan. He also pointed out, "This is not so much a return of technology stocks as it is a continuation of sector rotation - bank stocks are quite attractive, especially after the U.S. banking industry delivered outstanding results." In Japan, the Nikkei 225 Index closed up 1.5% at 68,751.51 points; the Topix Index rose 1.2% at 4,088.12 points. Dollar weakens for second day as cooling inflation undermines interest rate hike expectations U.S. inflation data released on Tuesday came in lower than expected, dimming bets on the Federal Reserve raising interest rates this month. The Bloomberg Dollar Index fell for a second consecutive day, with interest rate-sensitive two-year U.S. Treasury yields stabilizing after falling 9 basis points on Tuesday, while Japanese and Australian sovereign bonds also recorded gains. Tiffany Wilding, an economist at an investment management company, said that "the lower-than-expected CPI data is a big relief" and that the report "although will not completely eliminate the discussion of further interest rate hikes, it should actually rule out the possibility of a July interest rate hike." High oil prices and risks in the Middle East pose inflationary risks Despite the strong performance of the technology and financial sectors, tensions in the energy market still unnerved investors. Brent crude oil rose for the third consecutive day, with both the U.S. and European refined oil markets showing historic tensions. Further deterioration of the situation in the Middle East may bring a greater impact on oil prices to consumers who are already under pressure. Garfield Reynolds, a Bloomberg strategist and head of the MLIV Asia team, noted that "refined oil futures have risen much more than crude oil, which means that investors are overly optimistic about pricing in a rapidly fading energy supply shock this year, especially in the context of the recent escalation of the U.S.-Iran conflict. Investors have been inclined to bet that the impact of war in the Middle East and Europe is only temporary, a dynamic that will continue to plague equity, credit and bond markets." Rajeev De Mello, global macro portfolio manager at GAMA Asset Management, said, "The ongoing conflict in the Middle East remains the main constraint on the overall improvement in market risk sentiment."