September 25th Financial Breakfast: US consumer confidence plummets, gold hits a new high, OPEC raises medium- and long-term oil demand expectations

Wednesday (September 25) Financial Breakfast, including important fundamental news, precious metals/crude oil/foreign exchange/commodities/stock market/bond market, international news, domestic news, institutional views, today's important financial data and financial events. US consumer confidence has seen the largest decline in more than three years, pulling down US bond yields and the US dollar, and gold has hit a new record high. OPEC raised medium- and long-term crude oil demand, which is good for oil prices. Israel killed the head of Hezbollah's missile force in Lebanon. Hezbollah asked Iran to attack Israel, but Iran refused.

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Overview of major global markets

1. Precious metals

Due to the expectation of the Federal Reserve's interest rate cut and Israel's new round of attacks on Lebanon, spot gold hit a new high for three consecutive days on Tuesday, once hitting $2,664.27/ounce during the session, and finally closed up 1.08% at $2,656.67/ounce. Spot silver followed the rise of gold, with an intraday increase of 5% at one point, and finally closed up 4.58% at $32.1/ounce.

UBS said that although the record gold price may deter some investors, further monetary easing by the Federal Reserve, worsening tensions in the Middle East and Ukraine-Russia, and strong demand from investors and central banks may support further gains in gold prices.

2. Crude oil

OPEC raised its medium- and long-term oil demand expectations, and the risk premium of the geopolitical situation still exists. International crude oil rebounded on Tuesday. WTI crude oil once rose to $72 per barrel, and finally closed up 1.19% at $71.38 per barrel; Brent crude oil closed up 1.27% at $74.49 per barrel.

3. Foreign exchange

The US Conference Board Consumer Confidence Index in September fell to 98.70, lower than the expected value of 104 and the previous value of 103.30. The US dollar index was under pressure on Tuesday, and finally closed down 0.584% at 100.35.

Mazen Salhab, chief market strategist for the Middle East and North Africa at BDSwiss, said that if there is an unexpected US PCE data on Friday, it may affect US bond yields and the direction of the US dollar. PCE is the inflation indicator favored by the Federal Reserve. He said that if PCE inflation is lower than expected, U.S. Treasury yields may fall, putting further pressure on the dollar.

The dollar closed down 0.08% against the yen at 143.10 on Tuesday. Bank of Japan Governor Kazuo Ueda said on Tuesday that the Bank of Japan can afford to take the time to carefully study market and overseas economic developments when formulating monetary policy, suggesting that the central bank is not in a hurry to raise interest rates further

The euro's gains against the dollar were blocked on Tuesday, closing slightly up 0.04% at 1.1183. Traders raised their bets on the European Central Bank's easing policy, with a 60% probability of a 25 basis point rate cut in October.

The euro continued to fluctuate at a low level against the pound on Wednesday, closing up 0.01% at 0.8334. Kirstine Kundby-Nielsen, an analyst at Danske Bank, said that the Bank of England has signaled a gradual rate cut, and the excellent performance of the British economy, weak growth in the euro zone and the recovery of risk sentiment should continue to push up the pound against the euro (that is, lower the euro against the pound) in the short term.

4. Commodities

On Tuesday, London zinc closed up 4.3%, while London copper and London aluminum rose by as much as 2.5%.

5. Stock Market

China's Shanghai Composite Index closed up 114.21 points, or 4.15%, at 2863.13 points on September 24 (Tuesday); China's Shenzhen Component Index closed up 352.32 points, or 4.36%, at 8435.7 points on September 24 (Tuesday); China's CSI 300 Index closed up 139.15 points, or 4.33%, at 3351.91 points on September 24 (Tuesday); China's ChiNext Index closed up 84.81 points, or 5.54%, at 1615.32 points on September 24 (Tuesday); China's Science and Technology Innovation 50 Index closed up 24.01 points, or 3.73%, at 667.05 points on September 24 (Tuesday). The big financial sector exploded, and about 5,000 stocks in the two markets rose, with a transaction volume of more than 970 billion yuan.

Germany's DAX30 index closed up 177.26 points, or 0.94%, at 19005.75 points on September 24 (Tuesday); Britain's FTSE 100 index closed up 21.44 points, or 0.26%, at 8281.15 points on September 24 (Tuesday); France's CAC40 index closed up 95.93 points, or 1.28%, at 7604.01 points on September 24 (Tuesday); Europe's STOXX 50 index closed up 53.18 points, or 1.09%, at 4938.75 points on September 24 (Tuesday); Spain's IBEX35 index closed up 32.70 points, or 0.28%, at 11830.60 points on September 24 (Tuesday); Italy's FTSE MIB index closed up 193.20 points, or 0.57%, at 33,873.00 on Tuesday, September 24.

The Dow Jones Industrial Average closed up 83.57 points, or 0.20%, at 42,208.22 on Tuesday, September 24; the S&P 500 closed up 14.36 points, or 0.25%, at 5,732.93 on Tuesday, September 24; the Nasdaq Composite closed up 100.25 points, or 0.56%, at 18,074.52 on Tuesday, September 24.

David Kostin, chief U.S. equity strategist at Goldman Sachs Group, said that once the dust settles on the U.S. presidential election, U.S. stocks will continue to rise. Kostin said he expects the S&P 500 to be around 6,000 in a year. This forecast means the index is up about 5% from Monday's record closing level of about 5,719.

6. Bond market

U.S. bond yields fell collectively on Tuesday, with the benchmark 10-year U.S. bond yield closing at 3.733%; the two-year U.S. bond yield, which is more sensitive to monetary policy, closed at 3.548%, a new low in the past two years.

International News

① The Israeli military said it launched a new round of attacks on Hezbollah in Lebanon, saying that the head of Hezbollah's missile force was killed. Hezbollah in Lebanon asked Iran to attack Israel, but Iran refused.

② Market news: The White House supports the passage of a three-month continuing resolution (CR) and calls on both houses of Congress to quickly pass the bill to avoid a costly and unnecessary government shutdown and ensure that there is enough time to pass the full-year appropriations bill for fiscal year 2025 later this year.

③ U.S. Senate Majority Leader Schumer's Office: Ukrainian President Zelensky will visit the U.S. Congress on Thursday to meet with Democratic and Republican members of Congress.

④ A Reuters/Ipsos poll released on Tuesday showed that U.S. Vice President Harris' approval rating led former U.S. President Trump by 47% to 40% before the November U.S. presidential election, as she seemed to weaken Trump's advantage in the economy and employment.

⑤ Bank of Canada Governor Macklem said it was reasonable to expect a further reduction in the policy interest rate as Canada continues to make progress on inflation.

⑥ Source: German economic research institutes lowered their economic forecasts for 2024, predicting that the economy will shrink by 0.1% in 2024, while the previous forecast was for growth of 0.1%

⑦ Survey: The Swiss National Bank will cut interest rates by 25 basis points on Thursday and remain unchanged in December

⑧ US President Biden said that the conflict between Lebanon and Israel may still be resolved through diplomatic means

⑨ Commerzbank: Germany's economy is in a slump again, and there is little reason to be optimistic

⑩ S&P: It is expected that the Fed's interest rate cut cycle will drive emerging markets to accelerate growth in 2025

Domestic News

① General Office of the CPC Central Committee and the State Council: Collect economic compensation for provinces with a gap in cultivated land protection tasks, and give economic rewards to provinces that undertake more cultivated land protection targets

② In the first eight months, the total electricity consumption of the five southern provinces and regions of China increased by 8.3% year-on-year

③ National Development and Reform Commission: Treasury funds will drive equipment renewal to exceed 2 million units (sets)

④ Financial Supervision Bureau: Expand the scope of equity investment pilot of financial asset investment companies to 18 cities

⑤ CSRC issued the "Opinions on Deepening the Reform of the M&A and Restructuring Market of Listed Companies"

Institutional Views Summary

① Commerzbank: The gold price forecast for the end of this year and the end of 2025 was raised to US$2,600 per ounce, and the silver price forecast for the end of this year was raised to US$31 per ounce

② OPEC released the "World Oil Outlook 2024" in Brazil, raising its forecast for global medium- and long-term oil demand, citing growth leadership in India, Africa and the Middle East, as well as a slowdown in the shift to electric vehicles and cleaner fuels

③ International Nickel Study Group (INSG): Global nickel production is expected to increase to 3.65 million tons in 2025 and 3.52 million tons in 2024. Global nickel demand is expected to increase to 3.51 million tons in 2025 and 3.35 million tons in 2024

④ Moody's: Without substantial debt reduction measures, the United States will lose its only Aaa rating

⑤ S&P expects US economic growth to slow in 2025

⑥ Ryan McIntyre, managing partner of Sprott Inc: It is difficult for the United States to get rid of its economic difficulties even if it cuts interest rates. It is only a matter of time before gold exceeds $3,000

⑦ Hualong Securities: Pay attention to the allocation opportunities brought by the improvement of the fundamentals of listed insurance companies

⑧ Capital Economics: Despite dovish signals, the Reserve Bank of Australia may cut interest rates only next year