Data Hits Rate Cut Hopes, US Bonds Plunge, Dow's Worst Day in a Year, Gold Drops 2%, Oil V-Shaped Roller Coaster
The minutes of the Federal Reserve meeting suggested that policymakers would wait longer before considering rate cuts, and recent data have further dampened market expectations for rate cuts. The US May Composite PMI preliminary value released by S&P Global rose to 54.4, exceeding expectations and showing the fastest expansion of business activity in over two years. Meanwhile, the sub-indices indicated rising prices and increasing inflation: the input price index of the Composite PMI reached its second-highest level since September last year, factory input prices rose at the fastest pace in a year and a half, and the payment and receipt prices for service providers also increased.
Following the data release, US Treasury prices plummeted, and yields rose during the session. The two-year US Treasury yield, sensitive to interest rates, quickly rose above 4.90%, recovering nearly 10 basis points from its daily low. The US dollar index accelerated its rebound, turning positive during the session and reaching a new high for over a week, surpassing the level before the release of the US April CPI, which fueled expectations for rate cuts. Major US stock indices quickly lost their gains and turned negative during the session, with the Dow Jones Industrial Average experiencing its worst decline since the US banking crisis and Federal Reserve rate hikes in late March last year.
Advertisement
NVIDIA, the AI chip king, lived up to expectations, with its first-quarter results and guidance for this quarter once again exceeding expectations with triple-digit growth. However, it failed to boost the broader market as it did after the release of the previous quarter's report. Among the tech giants known as the "Seven Sisters," only NVIDIA did not fall. The chip index turned negative during the session, with Intel and Boeing, which hinted at slow "burning money" and a slow recovery in aircraft deliveries this year, becoming the culprits for the Dow's decline. On Thursday, the US stock market seemed to be a showcase for NVIDIA's "lonely beauty."
NVIDIA's performance reflects the continued strong momentum of AI computing spending. CEO Huang Renxun said that the most powerful chip, Blackwell, will be shipped in the second quarter and will bring a significant amount of revenue this year. The stock price rose by more than 10% during the session, with a market value exceeding the total market value of German listed companies, driving several AI concept stocks to rise sharply in the morning. Dell, which Huang Renxun called a key partner in NVIDIA's promotion of AI infrastructure, once rose by about 10%, but later generally fell, including NVIDIA's arch-rival AMD, the key "seller of shovels" in AI, Broadcom, and the AI "demon stock" Super Micro Computer, which has risen nearly 200% this year.
Most Chinese concept stocks continued to fall, and those that announced earnings were no exception, including NetEase, which saw a year-on-year revenue growth of 7.2% in the first quarter, still below expectations; Bilibili, which saw a revenue growth of 12% in the first quarter, with net losses expanding by more than 21%; and贝壳, which saw a sharp decrease in revenue and profits in the first quarter. Weibo, which saw a revenue decline in the first quarter but less than expected, rose by more than 5% before turning negative, while Pinduoduo once again surged after announcing its earnings on Wednesday, rising by nearly 9% at one point. The media reported that Alibaba is considering issuing $5 billion in convertible bonds, and Alibaba's stock once rose by more than 3%.
In the foreign exchange market, as the dollar turned positive after the release of the PMI, non-US currencies turned negative during the session. The yen and offshore renminbi fell to their lowest levels in more than three weeks, and the pound fell from the two-month high it reached on Wednesday due to the UK CPI, which dampened expectations for rate cuts. Cryptocurrencies such as Bitcoin also fell, with Ethereum turning negative after reaching a two-month high during the session. The US Securities and Exchange Commission (SEC) approved the trading proposals for Ethereum spot ETF products from several exchanges, paving the way for the listing of these ETFs. After the SEC's approval, Ethereum, which had fallen by more than 1% during the session, turned positive.
Among commodities, metals came under pressure as the dollar rebounded, but the decline in industrial metals such as伦铜 was less severe than on Wednesday. The prospect of delayed rate cuts further hit gold, with New York futures gold falling by more than 2% for the first time since the end of April, when data reignited inflation concerns. The data worsened the prospects for a Fed rate cut, and persistent high interest rates will hit oil market demand. International crude oil experienced a roller coaster during the session, with European stocks turning positive but failing to maintain the upward trend. US PMI data continued to decline, hitting a three-month low, and rising by more than 1% before falling by more than 1%.
However, the US Department of Energy announced on Wednesday that gasoline demand rose to its highest level since November last year, providing some support for oil prices ahead of the long weekend and the start of the summer driving season this week. In addition, Russia announced on Wednesday evening that due to "technical reasons," its production in April exceeded the OPEC+ production quota and would soon submit a plan to compensate for the reduction. Analysts believe that, given the recent weakness in oil prices, the OPEC+ oil production decision meeting to be held on June 1 is more likely to maintain the current reduction policy at least until the end of September.
The three major US stock indices all opened higher and quickly turned negative after the release of the US PMI data at the beginning of the session. The Dow Jones Industrial Average opened slightly higher by more than 20 points and quickly turned negative, falling by more than 1% at noon, and the decline expanded to more than 600 points by the end of the session. The S&P 500 opened nearly 0.7% higher, turned negative in the morning and fell by more than 0.1%, then turned positive slightly before turning negative again at noon, falling by more than 0.9%. The Nasdaq Composite opened nearly 1.2% higher, turned negative at noon, and fell by more than 0.7%.Among individual stocks releasing earnings reports, despite higher-than-expected revenue in the first fiscal quarter, cloud computing company Snowflake (SNOW) closed down 5.4%; VF Corp (VFC), a clothing and footwear company with quarterly revenue below expectations and a surprise loss in EPS earnings, closed down 2.9%; Intuit (INTU), the developer of tax software TurboTax, fell as much as 7% in after-hours trading after announcing lower-than-expected earnings guidance for the fourth quarter; Workday (WDAY), a company specializing in enterprise financial and human capital management software, fell more than 10% in after-hours trading after announcing second-quarter subscription revenue guidance below expectations; LiveRamp Holdings (RAMP), an advertising technology company with better-than-expected fourth-quarter results and strong guidance for the current quarter and full year, rose 6%; Deckers Outdoor (DECK), a footwear company, and discount department store Ross Stores (ROST) both saw their stock prices rise after-hours, with Deckers Outdoor (DECK) rising as much as 8% and Ross Stores (ROST) rising 7%, after each announced better-than-expected revenue and earnings for their respective fourth quarter and first quarter.
In terms of European stocks, investor concerns about more persistent high interest rates offset the positive impact of technology stocks from Nvidia, and the pan-European index, which had fallen for two consecutive days, rebounded slightly. The Stoxx Europe 600 Index closed up by less than 0.1%, temporarily bidding farewell to its closing low since May 13. Major European stock indices mostly closed up slightly or marginally, with German and French stocks rebounding after two consecutive days of losses, and the Italian index rebounding after four consecutive days of losses, while the UK and Spanish indices fell for three consecutive days. Among the sectors, utilities, which are sensitive to interest rates, fell by 2.7%, real estate fell by nearly 2.1%, while the technology sector closed up by nearly 1.2%. Among the constituents, ASML, the highest-valued technology stock listed in the Netherlands, rose by 2.6%, and Infineon, listed in Germany, rose by nearly 1%.
After the US PMI, the two-year US Treasury yield once rose nearly 10 basis points to a two-week high. The iShares US Treasury Bond ETF (GOVT) closed down 0.24%, falling for two consecutive days to a low not seen since May 13. The US 10-year benchmark Treasury yield once approached 4.40% before the US stock market opened,刷新ing a daily low. After the US PMI was announced, it quickly broke through 4.48%. During the early US stock market session, it once approached 4.50%,刷新ing a high not seen since May 14, recovering more than 9 basis points from the daily low. By the end of the bond market, it was about 4.48%, up about 6 basis points during the day.
The two-year US Treasury yield, which is more sensitive to interest rate prospects, once fell below 4.86% during the European stock market session,刷新ing a daily low. After the US PMI was announced, it quickly broke through 4.90%. During the early US stock market session, it once broke through 4.95%,刷新ing a high not seen since May 2, recovering nearly 10 basis points from the daily low. By the end of the bond market, it was about 4.94%, up about 7 basis points during the day, and other maturities of US Treasury bonds generally rose for two consecutive days this week, with only a decline on Tuesday.
After the US PMI, the US dollar index turned positive and hit a new high for over a week. Bitcoin fell more than $3,000 during the session, and Ethereum once turned negative after hitting a two-month high. The ICE US Dollar Index (DXY), which tracks the basket of exchange rates of the US dollar against the euro and five other major currencies, once fell below 104.70 before the US stock market opened, down nearly 0.3% during the day. After the US PMI was announced, it rose straight up, turned positive during the early US stock market session, and broke through 105.10 during the midday session, up nearly 0.2% during the day. After refreshing a high not seen since May 15 last Wednesday when the US April CPI was announced on Wednesday, it once again hit a new high during the session not seen since May 13.
By the end of the Thursday foreign exchange market, the US dollar index was above 105.10, up nearly 0.2% during the day; the Bloomberg US Dollar Spot Index, which tracks the exchange rates of the US dollar against ten other currencies, was up about 0.1% during the day, refreshing a high not seen since May 13 at the same time, and both the US dollar index and the Bloomberg US Dollar Spot Index have risen for four consecutive days.
Among non-US currencies, after the US PMI was announced, the British pound against the US dollar quickly turned negative at the beginning of the US stock market session, the euro against the US dollar turned negative in the morning session, and the British pound once fell below 1.2690 in the afternoon session, falling away from the high of 1.2760 that was刷新ed on Wednesday after the UK CPI was announced, and the euro once approached 1.0800,刷新ing a low not seen since May 14; the Japanese yen turned negative during the session, falling for two consecutive days, and the US dollar against the Japanese yen turned positive after the US PMI was announced, once rising to 157.20 during the early US stock market session,刷新ing a high not seen since May 1, up nearly 0.3% during the day.
The offshore renminbi (CNH) against the US dollar once rose to 7.2496 during the European stock market session,刷新ing a daily high, and then continued to fall back. After the US PMI was announced, it turned negative and accelerated its decline, once falling to 7.2596 during the early US stock market session. After hitting a new low not seen since April 30 on Wednesday, it once again refreshed a low not seen since April 29, falling back 100 points from the daily high. At 4:59 AM Beijing time on May 24, the offshore renminbi against the US dollar was reported at 7.2578 yuan, down 36 points from the New York close on Wednesday, and fell for two consecutive days after stopping a three-day decline on Tuesday.Bitcoin (BTC) briefly reclaimed the $70,000 mark during European trading hours, hitting a daily high, before continuing to decline. After the release of the US PMI, it fell more rapidly, once dropping below $66,800 during the US stock market lunch break, with some platforms showing a slight drop below $66,900, reaching the lowest point since May 20th. It fell over $3,000 from the daily high, nearly 5%, moving away from the high of over $71,900 on Tuesday, which was the highest since April 8th. At the close of the US stock market, it hovered around $66,800, with a drop of over 4% in the last 24 hours.
Ethereum (ETH) continued to rise, breaking through $3,940 during European trading hours, reaching the highest point since March 14th. After the release of the US PMI, it gave up most of its gains, falling below $3,800, and then recaptured $3,800 during the lunch break. After the close of the US stock market, it fell below $3,700, down more than 6% from the daily high, with a drop of over 1% in the last 24 hours. After the US SEC approved the modification of rules related to the listing of spot ETFs, Ethereum quickly turned bullish, approaching $3,890, with gains in the 24 hours expanding to over 1%.
Crude oil fell for the fourth consecutive day, turning from a more than 1% rise to a three-month low.
International crude oil futures turned positive during the early European trading session. At the peak of the US stock market session, US WTI crude oil broke through $78.60, up 1.4% for the day, while Brent crude oil approached $83, up 1.3% for the day. After the release of the US PMI, it continued to fall, turning negative during the US stock market morning session. At the lunch break, when it hit the lowest point since February 26th, US oil fell below $76.50, down nearly 1.5% for the day, while Brent oil once fell below $81.00, reaching the lowest point since mid-February, down nearly 1.2% for the day.
In the end, crude oil fell for four consecutive days. WTI July crude oil futures closed down $0.70, a decrease of 0.90%, at $76.87 per barrel; Brent July crude oil futures closed down $0.54, a decrease of 0.66%, at $81.36 per barrel, both reaching a three-month low.
The US oil ETF, United States Oil Fund LP (USO), closed down 0.55%, and the Brent oil ETF, United Sttes Brent Oil Fund LP (BNO), closed down 0.44%, both falling for four consecutive days to the lowest point since March 12th.
London nickel fell by more than 1%, and London copper fell for the third consecutive day. New York gold futures recorded the largest drop this month.
Most of the basic metal futures in London continued to close lower on Thursday, but the declines were generally far less than on Wednesday. London nickel, which led the decline on Wednesday with a 4.4% drop, fell by more than 1%, reaching the lowest point in a week, far from the high point since last August set on Monday, and continued to decline for three consecutive days along with London copper, lead, and tin. London copper, which fell by more than 4% on Wednesday, closed slightly lower at the lowest point in a week. Despite hitting a historical high on Tuesday, it may still accumulate a decline this week. London lead continued to fall away from the high point since April 2022 set on Monday. London tin hit a new low for the week. London lead, which fell by more than 3% on Wednesday, closed down by less than 0.4%, continuing to fall away from the high point since June 2022. Meanwhile, London zinc, which fell from the high point since February last year on Wednesday, closed flat.
Gold opened lower on Thursday and continued to decline, accelerating after the release of the US PMI. During the US stock market lunch break, when it hit the lowest point since May 9th, spot gold once fell below $2,331, down 2% for the day, and New York gold futures fell to $2,332.4, down more than 2.5% for the day.
By the close of the gold futures during the US stock market lunch break, COMEX June gold futures once again closed down by more than 2.3% after April 30th, at $2,337.2 per ounce, hitting the lowest closing point since May 8th, falling for three consecutive days. The SPDR Gold Trust (GLD) closed down 2%, falling for two consecutive days to the lowest point since May 8th. At the close of the US stock market, spot gold was below $2,332, down nearly 2% for the day, and both spot and futures gold were far from the historical high set on Monday.