The US and Iran will negotiate again, and the stock market shakes off the impact of war | Gu Tianhou

Although the US-Iran negotiations did not reach an agreement over the past weekend, US President Trump stated during a phone interview on Tuesday that the US-Iran talks may resume in the next two days. The market anticipates that a new round of negotiations between the US and Iran will help ease tensions, leading international oil prices to significantly drop to around $90. The latest US inflation data was not as severe as expected, and US stocks continued to rise on Tuesday, with AI-related stocks being in high demand, resulting in gains across the three major US indices. The Dow Jones Industrial Average opened up 53 points and continued to rise, closing up 317 points or 0.66% at 48,535; the S&P 500 rose 81 points or 1.18% to 6,967; and the Nasdaq increased by 455 points or 1.96% to 23,639. The Philadelphia Semiconductor Index reached a historical high for five consecutive trading days, rising another 2.04% on Tuesday to 9,224. Citigroup Upgrades US Stock Rating to "Overweight" Among the heavyweight stocks, Amazon and Meta closed up 3.8% and 4.4%, respectively, with Amazon being the strongest performer in the Dow. Chip stock Micron surged 9.2%, while NVIDIA gained 3.8%. Wells Fargo's net interest income for the first quarter fell short of expectations, causing its stock to drop 5.7%; JP Morgan lowered its full-year net interest income forecast, with its stock down 0.8%; Citigroup reported strong earnings, with its stock rising 2.7%. On the back of merger news, American Airlines and United Airlines saw their stock prices rise 8.1% and 2.1%, respectively. New York crude oil significantly fell by 7.87%, closing at $91.28 per barrel; the International Energy Agency (IEA) recently estimated that global oil demand will slightly decrease by 80,000 barrels per day this year, contrary to previous expectations of an increase of 730,000 barrels, marking the first contraction since 2020, reflecting demand destruction caused by supply shortages and rising oil prices. The agency noted that crude oil and refined product exports through the Strait of Hormuz have dropped to 3.8 million barrels per day, far below the pre-war level of around 20 million barrels, with the current baseline scenario assuming that Middle Eastern oil exports will largely return to normal by mid-year. In its global allocation, Citigroup upgraded its investment rating for US stocks from "Neutral" to "Overweight," citing that in the face of uncertainty caused by war, investors tend to favor higher-quality and more defensive stocks, predicting that the S&P 500 will rise to 7,700 by the end of the year, representing a 12% upside from Monday's close. Citigroup also downgraded its rating for emerging markets from "Overweight" to "Neutral," due to the impact of energy shocks and a strong US dollar. The US Producer Price Index (PPI) for March increased by 4% year-on-year, up from 3.4% in February, but lower than the expected rise of 4.6%. Month-on-month growth remained at 0.5%, below the estimated increase of 1.1%. During this period, the core PPI continued to rise by 3.8% year-on-year, less than the expected growth of 4.1%, and increased by 0.1% month-on-month, slower than the anticipated 0.4%. The inflation indicators are relatively moderate, and a rate cut is still expected this year. The yield on the US 10-year Treasury bond fell by 5.3 basis points to 4.243%, while the more interest-sensitive 2-year Treasury yield dropped by 3.6 basis points to 3.745%. The US dollar index fell by 0.41% to 97.97, while the Japanese yen rose by 0.53% to 158.6 per US dollar Bloomberg cited sources revealing that the Bank of Japan is considering a significant upward adjustment to its inflation forecast for the current fiscal year at this month's monetary policy meeting, in response to the recent sharp rise in oil prices, while also planning to lower its economic growth forecast. The Hang Seng Index is expected to find support at 26,000 points Hong Kong stocks performed well during the night session alongside U.S. stocks, with ADRs rising by over 200 points proportionally, peaking at the 26,100 level. This morning, the black futures continued to perform well, further rising to the 26,200 level. It is expected that Hong Kong stocks will open with a gap up this morning, breaking through the 50 and 100-day moving averages. However, due to the gap opening higher with a gap of over a hundred points, there may be a slight pullback in the early session to fill part of the upward gap. Nevertheless, with the external markets also showing positive trends, it is estimated that the 26,000 level will have initial support in the short term. As mentioned, the impact of the U.S.-Iran war news on the capital markets continues to diminish, and both the U.S. and Iran are willing to cease fire and engage in negotiations. Although the negotiation process will still take time, stock markets around the world have emerged from the quagmire of war and are regaining upward momentum. If the Hang Seng Index returns to the 50 and 100-day moving averages and stabilizes for several trading days, it will further challenge the large head and shoulders neckline at 26,300, which is also the current upper boundary of the daily Bollinger Bands. If it stabilizes, the Bollinger Bands will open upward with the next target being 26,500-26,660, with initial resistance expected at the 26,500-26,600 level. If it stabilizes, it will continue to move towards the 27,000 level and embark on a new upward wave. Short-term support for the Hang Seng Index is at 26,000/25,800/25,600, with resistance at 26,300/26,500/26,800. Gu Tianhou