- The artificial intelligence sector has rebounded for two consecutive days. OpenAI has submitted a confidential initial public offering application to the U.S. Securities and Exchange Commission, and SpaceX's oversubscribed equity subscription has reignited buying interest in tech stocks. S&P 500 futures and Nasdaq 100 futures rose 0.4% and 0.7% respectively in pre-market trading.
- Geopolitical risks have marginally eased as Israel and Iran reached a temporary agreement to halt mutual attacks. Additionally, former U.S. President Trump reiterated that a peace agreement with Tehran is imminent, leading to a significant drop in Brent crude oil futures by 1.8% to around $92 per barrel.
- Expectations of tighter monetary policy continue to pressure fixed-income assets. The yield on the U.S. 10-year Treasury remains above 4.5%. The market has fully priced in a 25 basis point rate hike by the European Central Bank this Thursday. The new Federal Reserve Chairman, Kevin Warsh, is set to make his policy debut on June 17.
AI Primary Market Heat Transmits to Secondary Market Valuations
After a brief revaluation, tech heavyweight stocks have regained investor favor. The European Stoxx 600 Index rose 0.5%, with semiconductor giants ASML (ASML:NL) and Infineon (IFX:DE) leading the gains. In U.S. pre-market trading, Nvidia (NVDA:US), Eli Lilly (LLY:US), and Goldman Sachs (GS:US) all saw gains of around 0.6%. Major breakthroughs in the primary market have acted as a catalyst for the tech sector, with OpenAI's confidential IPO application and SpaceX's oversubscribed valuation at 56 times future earnings highlighting strong global demand for core AI assets. Although Oracle (ORCL:US) is set to release its earnings report on Wednesday and Apple's (AAPL:US) updates to the Siri system at the Worldwide Developers Conference have not immediately boosted stock prices, buying institutions are still actively buying on dips at this point.
High Concentration of Short Positions Increases Technical Correction Risk
As indices return to high levels, the market's long-short battle has significantly intensified. David Chu, head of strategy at Citigroup (C:US), noted that traders are actively building short positions in the U.S. tech sector. The nearly 5% sell-off in the Nasdaq 100 Index only partially released market risk exposure. Guillermo Hernandez Sampere, head of trading at MPPM, stated that while AI offers a strong long-term growth narrative, the sector faces inevitable short-term technical valuation correction risks due to its highly dynamic development in a high-valuation environment. Bank of America's (BAC:US) global breadth rule also shows that nearly half of the world's stock markets are currently in a technically overbought state, with tech-oriented markets like South Korea and Taiwan leading the gains, suggesting that the concentration of long positions is approaching a critical point.
Global Central Bank Tightening Suppresses Long-Duration Assets
The bond market is repricing the probability of a Federal Reserve rate hike this year. According to data from the London Stock Exchange Group (LSEG), the yield on the U.S. 30-year Treasury has been above 5% for the longest period since 2007. Analysts at Bank of America noted in their latest report that inflation levels in 46 of the world's 68 major central banks remain above their official targets, forcing major global monetary authorities to maintain or resume tightening stances. The Bank of Indonesia (BI) announced an emergency rate hike ahead of its regular meeting to curb currency selling pressure and support the rupiah. The market currently expects a 60% probability of a Fed rate hike as early as October, and the expectation of a 25 basis point hike in December has been almost fully priced in. If the U.S. May Consumer Price Index released this Wednesday exceeds expectations, the bond market's repricing could further disrupt risk assets.
Yen Intervention Alert Line and Cross-Asset Pressure
Amid a slight two-day pullback in the U.S. dollar index, non-U.S. currencies and commodities remain generally under pressure. The USD/JPY exchange rate continues to fluctuate at high levels around 160.2, surpassing the important psychological threshold of 160 that previously triggered Japanese official forex intervention. Japanese Finance Minister Katsuyuki Katayama issued verbal intervention, stating that officials are always prepared to take decisive action. Meanwhile, due to the increased opportunity cost of non-yielding assets in a persistently high real interest rate environment, the gold market is underperforming, with New York gold futures down 0.3% to $4,351.80 per ounce, about 18% below the previous geopolitical conflict peak. The cryptocurrency market also lacks follow-through buying, with Bitcoin narrowly fluctuating around $63,366 after hitting a 20-month low of $59,125, as traders generally maintain a wait-and-see attitude, awaiting guidance from key inflation indicators.
Warsh's Debut and the Dual Approach of Macro Inflation Storm
Global financial markets are about to face a series of macroeconomic challenges. In addition to Wednesday's Consumer Price Index data, all market focus has shifted to the first rate decision chaired by new Federal Reserve Chairman Kevin Warsh on June 17. Wolf von Rotberg, equity strategist at Safra Sarasin Bank, warned that considering the potential rebound risk in energy prices in the coming months, if inflation data shows greater resilience, the Fed may adopt more aggressive rate guidance, directly challenging current equity market valuations. Bloomberg macro strategist Skylar Montgomery Koning also pointed out that while the short-term positive sentiment of the current trading day continues, with the approach of high-risk schedules in the next two weeks, cross-asset volatility is likely to rise substantially.
