Last week, the US stock market achieved an increase in volatility, with the Dow Jones Industrial Average, S&P 500 Index, and Nasdaq Index rising 0.29%, 1.32%, and 2.38% respectively for the week. Market insiders say that although the US stock market rose last week, the volatility of the US stock market highlights the market's wait-and-see attitude.
What is the market watching? This week's series of heavyweight events may provide direction for the market.
This week, the global financial community is eagerly anticipating two important interest rate resolutions - the Federal Reserve will announce the interest rate resolution and release the latest interest rate "dot matrix"; The Bank of Japan will also announce its interest rate decision, and whether there will be any changes to its bond purchase plan will become a market focus. In addition, two major conferences will be held this week: Apple holds the 2024 Global Developers Conference, and a series of innovative AI features are about to be unveiled; Tesla will hold its 2024 shareholder meeting, and whether Musk's $56 billion compensation plan can be approved is highly anticipated.
Speculative sentiment spreading in the US stock market
Last week, the US stock market rose amidst volatility, with outstanding performance from technology stocks driving a significant increase in the Nasdaq index. According to Wind data, the weekly gains of the Dow Jones Industrial Average, S&P 500 Index, and Nasdaq Index were 0.29%, 1.32%, and 2.38%, respectively.
Market insiders say that the US non farm payroll report in May exceeded expectations, and the market's expectations for a "soft landing" of the US economy have increased. Furthermore, it is worth noting that speculative sentiment in the US stock market is spreading, which has to some extent boosted market sentiment.
Keith Gill, the leader of retail investors, recently conducted a 50 minute live video broadcast, attracting over 600000 viewers. Market insiders say that Gill's ability to attract audiences illustrates a core fact on Wall Street at present: investors' interest and participation in risky assets, such as retail group stocks, continue to rise, and bullish sentiment is spreading across various investment sectors. Against the backdrop of the US stock market hitting new highs this year, most investors in the market have fallen into a panic of worrying about missing out on profitable opportunities.
However, many Wall Street institutions have warned that there may be a risk of a pullback in the US stock market.
Barry Bannister, Executive Director of US Equity Research and Head of Institutional Equity Strategy at American investment bank Stifel, recently stated that compared to the historic high of around 5300 points set in late May, the S&P 500 index is expected to experience a correction of about 10% before the end of the third quarter of this year.
Marko Kranovich, Chief Strategist for Global Markets at JPMorgan Chase, stated in a report that currently, with very high valuations, he does not consider US stock market investments attractive and does not see any reason to change this stance.
The US and Japan Interest Rate Resolution Jointly Appears
This week, the Federal Reserve and the Bank of Japan will join hands and the market will face a major test.
In the early hours of this Thursday (June 13th) Beijing time, the Federal Reserve will release its interest rate resolution and the US economic outlook report. Although the market generally believes that the Federal Reserve will maintain interest rates unchanged for the seventh consecutive time, the economic outlook report and interest rate chart to be released at this meeting are still highly anticipated.
Payden& Rygel Director and Chief Economist Jeffrey Cleveland stated that at the beginning of the year, the reason for the Federal Reserve's interest rate cut was based on hopes that US inflation and employment growth would cool, but neither of these expectations has been achieved so far. If the Federal Reserve does not cut interest rates in the face of high inflation in the United States, the environment for continuing to hold US treasury bond bonds may not be so bad.
CITIC Securities predicts that the Federal Reserve may not cut interest rates this year and will continue to suppress demand and inflation by maintaining high interest rates. This round of balance sheet tightening may end by the end of this year or early next year.
Following closely with the Federal Reserve, the Bank of Japan will announce its interest rate decision this Friday morning Beijing time, and whether the bond purchase volume has changed has become the focus of market attention.
Market insiders say that although the Bank of Japan is expected to maintain short-term interest rate stability, insiders suggest that officials may discuss whether to reduce bond purchases.
Bank of Japan's deliberative committee member, Seiji Anda, recently stated that the Bank of Japan may adopt a gradual interest rate hike while focusing on the economy. Even if the price target is determined to be achieved, authorities must avoid rapid interest rate hikes.
Apple will hold the 2024 Global Developers Conference
On the early morning of June 11th Beijing time, Apple will hold its annual WWDC Global Developers Conference, with the slogan "Get the big move!".
It is reported that the biggest highlight of this conference is the release of the latest operating system iOS 18. The new version of the operating system is expected to bring a series of innovative features, including the potential integration of generative AI technology, which may mark Apple's official integration into AI functionality.
It is worth mentioning that the market expects Apple to announce a partnership agreement with OpenAI, which will bring users an intelligent chat experience comparable to ChatGPT. This will also enable OpenAI to reach hundreds of millions of Apple users, including those who may have been unwilling to try ChatGPT.
Tesla will hold a shareholder meeting
On the early morning of June 14th Beijing time, Tesla will hold its 2024 annual shareholder meeting. In the eyes of market participants, this will be a gathering of gunpowder and smoke.
It is reported that shareholders need to vote on two major matters at this meeting: CEO Musk's $56 billion compensation plan and whether the company's registered address will be relocated from Delaware to Texas, where its headquarters is located.
It is worth mentioning that Tesla's eighth largest shareholder and the world's largest sovereign wealth fund, the Norwegian Sovereign Wealth Fund, recently announced that it will vote against Musk's $56 billion compensation plan at Tesla's annual shareholder meeting. The company stated that it will support the relocation of Tesla's registered address from Delaware to Texas.
In addition, Musk posted on Weibo on June 9th stating that Tesla will not launch a "facelift" model of the Model Y this year. It is worth noting that Tesla continuously upgrades its existing vehicles through OTA and other means, and Tesla vehicles show significant improvements in many aspects every six months.
The President of France announces the dissolution of the National Assembly
And hold new parliamentary elections
According to Xinhua News Agency on June 10th, French President Macron announced the dissolution of the National Assembly and the holding of new National Assembly elections on the evening of June 9th, due to the French ruling party's much lower support rate than far right-wing parties in the European Parliament elections that ended on the 9th.
Macron delivered a televised speech that evening, stating that the results of the European Parliament elections are not a good outcome for political parties defending Europe. According to the power granted to the President by the Constitution, he decided to leave the future of the National Assembly to voters to decide through voting. Therefore, he decided to dissolve the National Assembly and held two rounds of voting for the National Assembly elections on June 30 and July 7.
Analysts point out that in the history of the French Fifth Republic, there have been five instances in which the President dissolved the National Assembly in response to political or social crises faced by the government. The President hopes to dissolve the National Assembly and hold new parliamentary elections, giving the ruling party a chance to obtain an absolute majority of seats in the parliament. The Renaissance Party led by Macron, although leading other parties in the National Assembly seats, failed to reach an absolute majority, which has led to significant resistance from the opposition to the ruling party's reform plan in the National Assembly. The low support rate of the ruling party in this European Parliament election further exposes the "trust crisis" of the ruling party among voters.
According to a poll conducted by the French polling company É rabe on the evening of the 9th, 52% of French people support the President's decision to dissolve the National Assembly.