Financial Daily: US and Hong Kong stocks closed higher together, European auto sector under pressure, what investment signals lie behind the drop in oil prices?

- Focus

– US President Trump stated that his visit to China is expected to be postponed by about a month due to the Iran war.

– Several US allies have rejected Trump's call to send warships to escort vessels through the Strait of Hormuz.

– The Bank for International Settlements stated that the rise in oil prices due to geopolitical conflicts in the Middle East is a temporary shock, urging central banks not to overreact.

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- Stock Market

[US Market] Market panic eased, with all three major US stock indices closing higher.

The Trump administration is pushing a plan for multiple countries to jointly send warships to escort vessels passing through the Strait of Hormuz. Meanwhile, US Treasury Secretary Bethany Casteel said she expects oil prices to fall back to $80 within months. The International Energy Agency (IEA) stated it will consider further supply additions based on market conditions, in addition to the already announced emergency reserve release plan. Multiple developments helped ease market concerns over energy shortages caused by Middle East tensions, leading to a weakening crude oil and a collective rise in the three major US stock indices.

At the close, the S&P 500 Index rose 1.01% to 6,699.38 points; the Nasdaq Index rose 1.22% to 22,374.178 points; the Dow Jones Industrial Average rose 0.83% to 46,946.41 points. The VIX panic index fell 13.53% to 23.51 points. Except for declines in the oil and gas sector ETF, all other sectors strengthened.

The US tech seven giants index rose 1.38%, with all constituent stocks closing higher. Meta gained 2.33%, Amazon rose nearly 2%, NVIDIA climbed 1.63%, and Tesla, Microsoft, Google A, and Apple all rose more than 1%. The Nasdaq Golden Dragon China Index gained 0.95% to 7,215.84 points. Among popular Chinese stocks, BYD surged over 8%, Xiaomi and Li Auto both rose over 5%, and Nio gained 3.1%. In individual stocks, Circle jumped over 9%, while Taiwan Semiconductor rose 0.53%.

[European Market] European major country indices generally closed higher on Monday.

On Monday, European major country indices generally closed higher. At the close, the pan-European STOXX 600 Index rose 0.44% to 598.47 points. The pan-European STOXX 50 Index increased 0.39% to 5,739.01 points; among them, automobile sector stocks broadly weakened, with BMW and Mercedes-Benz falling over 2%, and Volkswagen dropping 1.59%.

The German DAX 30 Index rose 0.50% to 23,564.01 points; the French CAC 40 Index gained 0.31% to 7,935.97 points; the UK FTSE 100 Index advanced 0.55% to 10,317.69 points.

[Asian Market] Asian stock markets were mixed on Monday, with South Korean indices rising over 1%.

Asian stock markets were mixed on Monday, with South Korea's index rising over 1%. By the close, Japan's Nikkei 225 Index fell 0.13% to 53,751.15 points, and Japan's TOPIX Index dropped 0.50% to 3,610.73 points. The KOSPI Index in South Korea rose 1.14% to 5,549.85 points.

[Hong Kong Market] All three major Hong Kong stock indexes closed higher, with the Hang Seng Tech Index up nearly 2.7%

Hong Kong stocks steadily advanced on Monday, with all three major indexes rising over 1%. By the close, the Hang Seng Index was up 1.45% at 25,834.02 points; the Hang Seng Tech Index rose 2.69% to 5,111.78 points; and the Hang Seng China Enterprises Index gained 1.67% to 8,816.32 points. In terms of sectors, chip stocks performed strongly, with Montage Technologies closing nearly 8% higher and Huahong Semiconductor up over 7%. Pharmaceutical stocks strengthened, with Changfeng Pharmaceutical surging about 21%, and CSPC Pharma rising more than 5%. Non-ferrous metals and precious metals sectors weakened.

[A-share Market] Mixed performance among A-share indexes, with the ChiNext Index up over 1%

A-shares reversed earlier losses to rise throughout the day, with mixed performances among the three major indexes, and the ChiNext Index rising over 1%. By the close, the Shanghai Composite Index fell 0.26% to 4,084.79 points; the Shenzhen Component Index rose 0.19% to 14,307.58 points; and the ChiNext Index climbed 1.41% to 3,357.02 points. The chip sector performed strongly, particularly storage chip stocks, with Netac Technology hitting a 20% limit-up, and BIWIN Storage rising over 13%. Analog chip stocks surged, with Hua Hong Company climbing over 12%, and Gigadevice Innovations hitting limit-up. Reports suggest that semiconductor industry supply chains might generally raise prices, pushing the semiconductor sector higher, with Guoke Electronics and Guosheng Technology rising over 10%.

– Bonds

[US Bonds] US Treasury yields fell.

U.S. Treasury yields declined, with the 10-year yield falling 5.68 basis points to 4.2199% in late New York trading, and the two-year yield dropping 3.94 basis points to 3.6774%.

[Non-U.S. Bond Markets] 10-year European government bond yields weakened

The 10-year European government bond yields weakened on Monday. At the European session close, Germany’s 10-year yield fell 3.1 basis points to 2.952%; the UK 10-year yield dropped 5.6 basis points to 4.767%; and France’s 10-year yield declined 5.5 basis points to 3.618%.

[China Bond Market] Tuesday saw across-the-board declines in government bond futures

Government bond futures fell across the board on Tuesday. By the close, the 30-year main contract dropped 0.43%, the 10-year main contract fell 0.11%, the 5-year main contract slipped 0.08%, and the 2-year main contract declined 0.04%.

– Foreign exchange

The US dollar weakened, with the ICE Dollar Index falling by 0.68%.

The decline in oil prices reduced market risk aversion sentiment, which to some extent lowered the safe-haven demand for the US dollar, causing the dollar to weaken. In late New York trading, the ICE Dollar Index fell by 0.68% to 99.660 points, while the Bloomberg Dollar Index dropped by 0.72% to 1,208.10 points.

[Non-US Currencies] The US dollar weakened against most major currencies

The US dollar weakened against major global currencies, with the Japanese yen rising nearly 0.5%. In late New York trading, the dollar fell 0.46% against the yen to 159.00 yen. The euro rose 0.80% against the dollar, the pound increased 0.67% against the dollar, and the dollar dropped 0.46% against the Swiss franc. The Australian dollar surged 1.30% against the dollar.

The offshore yuan exchange rate stood at 6.8890 per US dollar.

In late New York trading, the offshore yuan exchange rate rose by 175 points compared to the previous trading day, standing at 6.8890 yuan per US dollar. The onshore yuan exchange rate closed at 6.8997 yuan per US dollar, up 33 points from the previous trading day's closing price.

The cryptocurrency market strengthened, with Bitcoin surpassing $74,000.

On Monday, the cryptocurrency market strengthened as risk appetite improved, with Bitcoin rising more than 3% to surpass $74,000. Ethereum surged about 10% following Blackrock's launch of a new ETF.

– Product

Crude oil futures declined, with US crude oil futures dropping over 5.2%.

Concerns over potential crude oil supply disruptions and inflation eased after Trump proposed a plan for multiple nations to send warships to escort vessels through the Strait of Hormuz, along with the International Energy Agency considering adding oil supplies based on market conditions. Oil prices weakened, with US crude oil futures falling over 5.2%, settling at $93.50 per barrel.

Most precious metals rose, while gold weakened.

Precious Metals:Near the close in New York, spot gold prices fell 0.23% to $5,007.93 per ounce; US gold futures dropped 0.89% to $5,016.80 per ounce.

Metals Futures Market:Most precious metal prices rose, with spot silver climbing 0.33% to $80.8580 per ounce; US silver futures declined 0.33% to $81.045 per ounce. US copper futures increased by 1.36% to $5.8355 per pound; spot platinum surged 4.61%, and spot palladium rose 3.84%.

[Disclaimer]

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