The US ISM Manufacturing Purchasing Managers' Index (PMI) for June dropped to 46, hitting a three-year low since May 2020. It has remained below the 50 threshold for eight consecutive months, marking the longest contraction period since 2008-2009. Market expectations were for an increase to 47.1, compared to the previous value of 46.9.
Specifically, the production sub-index hit a three-year low, while new orders continued to shrink for the tenth consecutive month, indicating weak demand. The employment index fell into the contraction zone, reaching a three-month low, and the price paid index hit its lowest level this year, confirming a trend of slowing inflation.
Investors are awaiting the release of the minutes from the June FOMC meeting by the Federal Reserve on Wednesday, the JOLTS job openings on Thursday, and the US non-farm payrolls for June on Friday, in search of clues for future interest rate hikes. The market is betting with nearly 90% probability that the Federal Reserve will raise interest rates by 25 basis points in July.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/1876bafe-dce7-4e05-afc2-729b74fe2cc6.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Image" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/1876bafe-dce7-4e05-afc2-729b74fe2cc6.png"/>
It is expected that the &#34;mini non-farm&#34; ADP private sector employment report, to be released on Thursday, will show an increase of 220,000 jobs in June, weaker than the previous increase of 278,000. The non-farm payrolls for June are expected to add 240,000 jobs, also weaker than the previous increase of 339,000. The Federal Reserve is not expected to raise interest rates in June, but has hinted at two more rate hikes later this year, which is more hawkish than market expectations. Last week, Powell stated that based on the latest economic data, it is possible to raise rates at consecutive policy meetings.
In addition, US Treasury Secretary Yellen will visit China from July 6th to 9th.
<h2>US stocks rise before the holiday, S&amp;P 500 rises for three consecutive days, and Nasdaq hits nearly 15-month high, Tesla rises nearly 7%, the largest in three and a half months</h2>
Monday, July 3rd, is the first trading day of the second half of 2013. The US stock market and bond market will close early at 1:00 PM and 2:00 PM Eastern Time, respectively, and will remain closed on Tuesday for the US Independence Day holiday.
At the opening, only the Nasdaq rose among the three major indexes, continuing its leading trend of a 32% cumulative increase in the first half of the year. The S&amp;P 500 turned positive half an hour after the opening, but later erased its gains due to disappointing US ISM manufacturing data, and the Dow Jones narrowed its decline from 120 points or 0.4% to 0.1%.
The Nasdaq slightly declined before noon, but US stocks ultimately closed higher. The S&amp;P 500 rose for three consecutive days, along with the two-day rise of the Nasdaq, reaching its highest level in nearly 15 months since early April last year. The Dow Jones rose for three consecutive days to its highest level in seven months, and the Russell small-cap index rose for six consecutive days to its highest level in four months:
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The S&amp;P 500 rose 5.21 points, or 0.12%, to close at 4455.59. The Dow Jones rose 10.87 points, or 0.03%, to close at 34418.47. The Nasdaq rose 28.85 points, or 0.21%, to close at 13816.77. The Nasdaq 100 rose 0.19%, and the Russell 2000 small-cap index rose 0.43%. The &#34;fear index&#34; VIX fell 0.15% to close at 13.57.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/7c924914-e86f-4616-9933-5020730231d0.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/7c924914-e86f-4616-9933-5020730231d0.jpeg"/> US stocks collectively rose after volatility, with Russell small-cap stocks performing well.
S&amp;P 11 sectors mostly rose, with consumer discretionary up over 1%, real estate, consumer staples, utilities, and financial sectors up between 0.63% and 0.85%, while information technology/tech fell over 0.3% and healthcare fell over 0.8%.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/525b3755-eb10-482e-8810-13c754e089ea.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/525b3755-eb10-482e-8810-13c754e089ea.jpeg"/> Consumer discretionary and banking stocks lead the way, while technology and healthcare sectors perform poorly.
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Tech stocks show mixed performance. &#34;Metaverse&#34; Meta fell 0.3%, moving away from its one-week high. Apple fell 0.8%, moving away from its all-time high but still maintaining a market value of over $3 trillion. Amazon fell 0.1%, missing out on its highest level in nearly ten months. Netflix and Google A rose 0.2%, while Microsoft fell 0.8%, moving away from its two-week high. Tesla rose 8.6% and then closed up 6.9%, marking its fifth consecutive day of gains and reaching its highest level since September 28th of last year, also achieving its largest single-day increase since March 21st of this year.
Chip stocks rise in the final trading session. The Philadelphia Semiconductor Index initially rose over 1% before turning lower, ultimately closing up 0.8% and surpassing 3700 points, marking a three-day consecutive rise to a two-week high. AMD rose 1.7%, Intel turned up 0.5%; &#34;AI darling&#34; Nvidia rose 0.3%, returning to a high level of over one week and maintaining a market value above $1 trillion, with a cumulative increase of 190% this year.
AI concept stocks rebound in the final trading session. C3.ai rose nearly 3%, marking a five-day consecutive rise to a one-week high. SoundHound.ai fell 0.4%, still not far from the one-year high set last Wednesday. BigBear.ai rose nearly 2%, Palantir Technologies rose over 1% to a two-week high.
In terms of news, it is reported that Apple has lowered its production forecast for Vision Pro mixed reality headsets, with production expected to be less than 400,000 units in 2024. Meta and Tencent have made progress in their cooperation on VR headsets. Tesla's second-quarter deliveries and production both reached record highs, far exceeding expectations, with a year-on-year delivery growth of 83%, indicating the success of its price reduction strategy and driving a general rise in new energy vehicle stocks.
Popular Chinese concept stocks lead the way, with the KWEB ETF rising nearly 4% and then closing up over 2%, CQQQ rising nearly 3% and then closing up 2%, and the Nasdaq Golden Dragon China Index (HXC) rising 4.2% and then closing up over 2% to a two-week high. Blockchain concept stocks are among the top gainers, with Bit Digital rising 13% and GDS Holdings rising over 7.5%.
In the Nasdaq 100 constituents, JD.com rose 4.7% and closed up 3%, Pinduoduo rose 5.6% and closed up over 3%, Baidu rose over 7% and closed up 4.7%. Other Chinese internet stocks also saw cumulative gains, with Alibaba rising 2.7% and closing up nearly 1%, Tencent ADR rising 2.3% and closing up over 1%, and Bilibili rising nearly 6% and closing up over 4%. Xpeng Motors initially rose nearly 11% and led the new energy vehicle stocks, ultimately closing up over 4%, while NIO and Li Auto both rose over 8% and closed up over 3%, and BYD ADR rose over 4% and closed up 3%.
In terms of news, the demand for electric vehicles has surged, leading to a record high sales volume for BYD in the second quarter, with the delivery volume of pure electric vehicles nearly doubling and the sales volume of new energy vehicles in June breaking records. Xpeng Motors' delivery volume in the second quarter rebounded on a quarterly basis for the first time in over a year, reaching the highest level this year in June. Both NIO and Li Auto had positive delivery volumes in the second quarter and in June.
Bank stocks hit a two-week high together. The industry benchmark, the KBW Bank Index (BKX) on the Philadelphia Stock Exchange, rose 1.8%, reaching its lowest level since October 2020 on May 4. The KBW Nasdaq Regional Bank Index (KRX) rose over 2%, reaching its lowest level since November 2020 on May 11; the SPDR S&amp;P Regional Banking ETF (KRE) rose over 2%, reaching its lowest level since October 2020 on May 4.
The &#34;big four&#34; U.S. banks all rose nearly 2%, with only JPMorgan Chase having a smaller increase. Regional banks also rose across the board, with PacWest Bancorp, Western Alliance Bancorp, and Keycorp all rising by about 3%, and Zions Bancorporation rising nearly 5%.
Other stocks with significant changes include:
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Rivian, a rival to Tesla and an American electric pickup truck manufacturer, rose over 17% to its highest level in nearly five months, achieving its best single-day gain in eight months, and has risen over 40% in the past five days. Its delivery volume and production in the second quarter were three times that of the same period last year and far exceeded expectations.
AstraZeneca fell nearly 9% to its lowest level in nearly four months. The company announced preliminary results from a Phase III clinical trial of a lung cancer treatment that were not as expected, with overall survival data being &#34;immature&#34; and the results not statistically significant. The trial will continue.
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European stocks, except for the Italian stock index, fell overall. The pan-European Stoxx 600 index fell 0.21%, with mining stocks leading the gains by over 2%, and the oil and gas sector rising 1.6%. Healthcare stocks fell 2%, dragged down by AstraZeneca's stock price, while Italian bank stocks rose over 1%.
<h2>Disappointing manufacturing data initially caused U.S. bond yields to fall during the day, but they rebounded near a four-month high at the end of the day</h2>
Investors weighed economic trends and interest rate prospects, and the two-year U.S. Treasury bond yield, which is more sensitive to monetary policy, rose nearly 9 basis points to 4.96% at its highest point during the day, reaching a four-month high since March 5. After the disappointing manufacturing PMI data, it briefly fell during the day, reaching a daily low and approaching 4.84%, but rebounded near the end of the U.S. stock market session and traded at 4.92%.
The 4.90% level was retested.
The yield on 10-year benchmark US Treasury bonds rose more than 5 basis points to 3.87% during the day, approaching the highest level since early March set last week. Poor manufacturing data briefly caused it to turn negative during the day, falling below 3.78% and retracing 9 basis points from the daily high. US stocks rebounded to 3.85% at the end of the day.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/51d83e2e-a644-45ac-9f55-afed3cd33701.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/51d83e2e-a644-45ac-9f55-afed3cd33701.jpeg"/> Poor manufacturing data briefly caused US bond yields to fall, and they returned to near a four-month high at the end of the day.
Despite a drop in eurozone factory activity to a three-year low in June, eurozone bond yields stopped falling and rebounded. At the end of the day, the benchmark 10-year German bond yield, which had fallen more than 1 basis point, rebounded slightly and returned above 2.40%, while the 2-year yield rose more than 4 basis points and surpassed 3.30%. The market is waiting for heavyweight data such as German industrial orders and US non-farm payrolls for June, which will be released later this week, in a quiet trading environment.
Some analysts believe that the yield spread between US and German 2-year/10-year government bonds has deepened in the second quarter. This not only represents investors' bets that central banks in Europe and the US will have to raise interest rates more than previously expected to combat inflation, but also suggests that central banks in Europe and the US may have to cut interest rates as soon as possible to deal with a recession.
<h2>Oil prices stop rising for three consecutive days, with a 1% decline at the end of the day, US oil falls below $70, European natural gas falls by about 8%</h2>
Poor manufacturing data in Europe and the US caused oil prices to stop rising and turn negative during the day. Concerns about global economic slowdown and further interest rate hikes by central banks in Europe and the US overshadowed the boost to oil prices from Saudi Arabia and Russia's plan to reduce supply in August.
Initially, WTI crude oil rose more than $1 or 1.6%, surpassing $71. At the beginning of the US stock market, it turned negative and fell the most by 1.3% or nearly $1, falling below the psychological level of $70. International Brent crude oil also rose more than $1 or 1.6%, surpassing $76, but then fell the most by 1.1% and fell below $75, ending a three-day rally and retreating from a one-week high.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/89a70944-0898-430e-99db-c2b169dee279.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/89a70944-0898-430e-99db-c2b169dee279.jpeg"/> Oil prices stop rising for three consecutive days, with a 1% decline, and US oil falls below $70
On the news front, Saudi Arabia announced that it will voluntarily cut production by 1 million barrels per day from July to August, and Russia also plans to reduce oil exports by 500,000 barrels per day in August, equivalent to 1.5% of global supply, bringing the total commitment of OPEC+ production cuts to 5.16 million barrels per day.
However, Brent crude oil has fallen nearly 11% this year, far below last year's level of $113, as the market worries that major economies' recovery is not as expected, Europe and the US are about to enter an economic recession, and Russia and Iran's exports remain strong, all of which have put pressure on oil prices. Last week, speculative bets against WTI by hedge funds and other speculators reached the highest level since 2017.
European benchmark TTF Dutch natural gas futures fell more than 7% at the close, hovering near the daily low and giving up the one-and-a-half-week high. ICE UK natural gas fell more than 8%, while US August natural gas futures plunged 4.5%, erasing most of the gains since the end of June.
<h2>After falling, the US dollar rebounded and hovered around 103, offshore renminbi fell below 7.27 and then rebounded, and the yen approached an eight-month low</h2>
The US dollar index DXY, which measures against six major currencies, rose 0.3% before the release of the ISM manufacturing data, but fell and dropped below the 103 level after the release of poor data. US stocks rose slightly at the end of the day, accumulating nearly 2% in the first half of the year due to expectations of interest rate hikes.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/2f5d6186-360b-4517-9800-37d1c1130ba6.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/2f5d6186-360b-4517-9800-37d1c1130ba6.jpeg"/> Poor manufacturing data briefly pushed the US dollar below 103
The euro against the US dollar stabilized above 1.09, and the pound against the US dollar traded around the 1.27 level. The market believes that the European and British central banks will have stronger interest rate hikes than the Federal Reserve. The offshore renminbi briefly fell below 7.27 yuan, approaching an eight-month low, and US stocks rose and broke through 7.26 yuan during the trading session.
The yen against the US dollar briefly approached 145, close to the near eight-month low since early November last year, and the yen fell 9% in the first half of the year. Against the euro, it hit a fifteen-year low last week, and investors are closely watching whether the Japanese authorities will intervene in the currency market.
Mainstream cryptocurrencies are rising. The largest cryptocurrency leader, Bitcoin, rose more than 1% and broke through $31,000, reaching a high not seen since early May last year. The second-largest cryptocurrency, Ethereum, rose more than 2% and broke through $1,960, reaching a two-month high.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/4571ad5e-85de-4c0c-bdfe-f2112065262d.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/4571ad5e-85de-4c0c-bdfe-f2112065262d.jpeg"/> Bitcoin recovers from last Friday's decline and rises above $31,000 again
<h2>Spot gold fell below $1,910 and then rebounded, London copper rose for two consecutive days to a one-week high, and London aluminum moved away from a nine-month low</h2>
Under the expectation of interest rate hikes, the US dollar and US bond yields strengthened, which temporarily pushed down gold prices. Poor manufacturing data caused gold to jump in the short term. Safe-haven demand receded, causing gold to fall 2.5% in the second quarter, but it still held above the $1,900 level.
COMEX August gold futures closed roughly flat at $1,929.50 per ounce. Spot gold fell 0.5% and dropped below the $1,910 level, then rebounded and rose 0.6%, briefly breaking through $1,930. The intraday volatility was close to $21, and it rose for two consecutive days to a one-week high.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/b3caff40-92de-45a3-a8ae-893ae53b6a06.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/b3caff40-92de-45a3-a8ae-893ae53b6a06.jpeg"/> Spot gold fell below $1,910 and then rebounded, rising for two consecutive days to a one-week high
London industrial basic metals mostly closed higher. London copper rose 1% to approach $8,400, marking a two-day consecutive increase to a one-week high. London aluminum edged up slightly, moving away from a nine-month low. London nickel rose slightly to a one-week high. London tin surged nearly $600 or more than 2%, breaking through $27,000 to reach a two-month high. London zinc fell 1%, while London lead declined slightly. Some analysts believe that concerns about demand for industrial metals still persist.

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The contraction of the US ISM manufacturing activity reached its deepest level in three years, causing the US dollar index to fall below 103 and the US bond yields to decline intraday. On the first trading day of the second half of the year and the eve of the US Independence Day holiday, the S&P 500 and NASDAQ Composite Index both reached nearly 15-month highs. Tesla rose by nearly 7%, marking its largest gain in three and a half months. The Nasdaq Golden Dragon China Index rose over 4% and closed more than 2% higher at a two-week high. Internet and new energy vehicle stocks rose across the board, with XPeng Motors briefly surging by nearly 11%. Towards the end of the session, the US dollar rebounded, and US bond yields approached a four-month high again. Offshore renminbi fell below 7.27 yuan and then rebounded, while the Japanese yen hovered near an eight-month low. Metals rebounded, and oil prices fell by 1%, with US crude falling below $70.

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US stocks rise, Chinese concept stocks lead the way with strong performance, Tesla leads the new energy vehicle sector, and the US dollar and US bond yields first decline and then rise.