Today, the gold, copper, and other non-ferrous sectors of the Hong Kong A market both registered the highest gains.

As of press release, A-shares of Zhongrun Resources had risen to a halt, Xiaocheng Technology, Pengxin Resources, and Shengda Resources had risen more than 6%, Zijin Mining had risen more than 5%, Yunlu Co., Ltd. and Hengbang Co., Ltd. had risen more than 4%, and Hunan Gold had risen more than 3%.

In terms of Hong Kong stocks, China Gold International rose more than 8%, and Minmetals Resources rose more than 7%.The Zijin mining industry rose more than 5%, while Lingbao Gold and Shandong Gold rose more than 4%.The Jiangxi copper industry rose more than 3%.

According to the news, US inflation in June cooled more than expected, and the Fed's interest rate hike process is gradually coming to an end. July may be the last time to raise interest rates. Affected by this, the US dollar index fell, and futures such as gold soared.

Overnight,COMEX August gold futures closed up 1.27% to $1961.70 per ounce;internationalCopper prices continued to rise, hitting a three-week high.The main domestic futures contracts also generally rose at the close of early trading. Bank of Shanghai rose more than 3%, while Shanghai Nickel and Shanghai Zinc rose more than 2%.

The end of interest rate hikes is nearing

Yesterday, the US Department of Labor released the latest inflation data for June. Both CPI and core CPI were significantly lower than market expectations.

The US unseasonally adjusted CPI in June was 3% year on year, expected 3.1%, and the previous value was 4%. It fell for 12 consecutive months, the lowest since April 2021;
The core CPI was 4.8% YoY, the expected 5%, and the previous value was 5.3%, the lowest since November 2021;
The overall CPI has been lower than the core CPI year-on-year ratio for 4 consecutive months;
The CPI after the seasonal adjustment was 0.2% month-on-month, the expected 0.3%, and the previous value was 0.1%; the core CPI was 0.2% month-on-month, the expected 0.3%, and the previous value was 0.4%.

According to the employment data released last Friday, the labor market has also cooled down, but wage growth has exceeded expectations.

In June,The non-agricultural employed population increased by 209,000 after the seasonal adjustment, which was lower than expected. The May data was revised down from an increase of 339,000 to an increase of 306,000;
The unemployment rate was 3.6%, the forecast was 3.6%, and the previous value was 3.7%;
The average hourly wage increased by 4.4% year on year and is expected to increase by 4.2%. The previous value was revised up from a 4.3% increase to a 4.4% increase.

Under the influence of the above economic data, the Federal Reserve will hold an interest rate meeting on July 25-26. The market's current expectation is to continue raising interest rates by 25 basis points in July, but this is the last time interest rates will be raised.

Guosheng Securities pointed out that the current US economic and financial situation already supports interest rate cuts, while employment and inflation still support continued interest rate hikes. According to historical experience, when the CPI and core CPI are below 3.5% year-on-year, interest rate hikes can be stopped if the additional non-agricultural sector falls to around 250,000, and interest rate cuts can begin when they drop to around 150,000. Currently, CPI has met the conditions for interest rate cuts year on year. Although the core CPI is too high year on year, a downward trend has been established, soThe rate at which employment deteriorates will be the core influencing factor of the Fed's shift.

CICC, on the other hand, believes thatThe Federal Reserve will continue to raise interest rates at the upcoming July FOMC meeting, butThe threshold for continuing to raise interest rates after July is high, and expectations of market easing may heat up again.

However, the CITIC Bonds team clearly believes thatIn a context where the risk of a short-term US recession is limited, controlling inflation will remain the focus of the Federal Reserve, it is expectedThere is a high probability that interest rate hikes will be restarted in the second half of the year, and the possibility of raising interest rates more than once is not ruled out.

Overmatched gold, overseas growth style stocks

In terms of configuration, CICC suggestsOvermatched by gold, we are optimistic about Chinese and foreign growth style stocks in a phased manner:

1) Recently, interest rates on 10-year US Treasury bonds have exceeded 4%, and gold has fallen to close to 1,900 US dollars at most, which is relatively sufficient for austerity expectations. If core inflation continues to fall, gold is expected to dominate. Since inflation expectations did not change significantly during the current cycle, the decline in inflation will not hurt gold; on the contrary, the decline in real interest rates will favor gold's performance. If there are macro-risks such as economic recession, financial market shocks, or geopolitical events, gold can also be a good hedge target.

In the long run, structural factors such as anti-globalization and de-dollarization may increase the demand for gold purchases from central banks and investors around the world, causing gold to rise through the economic cycle. Therefore,Maintain an oversupply of gold,The period when gold will increase more is likely to be in the fourth quarter.
2) Declining inflation+not bad growth is the ideal macro-environment for growth-style stocks.Chinese stocks are overdistributed, the style is growing, and overseas growth style stocks have been raised to overdistribution in stages.At the same time, it is recommended to pay close attention to signs of economic slowdown in Europe and the US and financial market risks.

The Galaxy Securities Research Report pointed out that the direction in which the domestic economy is recovering and the Fed's interest rate hike is coming to an end is clear. Despite the twists and turns, the cycle will eventually arrive. As the domestic economy continues to recover in the second half of the year and the Fed's interest rate hike is likely to end, the non-ferrous metals industry may reach an inflection point between performance bottoming out and industry sentiment.