Unexpected cooling of inflation data sparks attention, with the three major U.S. stock indices rising together, and a divergence in performance between tech stocks and precious metals.

Market Overview: Inflation Expectation Adjustment Boosts Stock Market

On Thursday, the U.S. Department of Labor released the November Consumer Price Index report, which became the market focus. The annual CPI was 2.7%, the slowest growth since early 2021, below the expected 3.1%; core CPI increased by 2.6% year-over-year, also weaker than the expected 3%. Unemployment benefit claims for the same week fell to 224,000, slightly better than expected. The unexpectedly weak inflation data immediately ignited market expectations for further easing by the Federal Reserve.

The VIX fear index subsequently dropped 4.37%, the 2-year U.S. Treasury yield briefly touched 3.43%, hitting a two-month low, while the 10-year benchmark yield fell back to 4.12%. This improvement in the interest rate environment directly drove a rebound in the stock market, with all three major U.S. indices rising. The Nasdaq increased by 1.38% to 23,006 points, the S&P 500 rose by 1.16%, and the Dow Jones modestly increased by 0.47%.

Stock Highlights and Hot Topics

Chip manufacturer Micron Technology surged over 10% due to optimistic earnings prospects, becoming a market focus. Amazon’s stock rose 2.5%, performing the strongest, followed by Nvidia up 1.9%, and Tesla up 3.5%. The China Golden Dragon Index also rebounded 0.97%. European stocks also gained, with the UK rising 0.65%, and France and Germany closing higher by 0.8% and 1%, respectively.

Global Market Overview

In Hong Kong, the Hang Seng Index futures closed at 25,675 points in the overnight session, 177 points above yesterday’s close of 25,498; the China H-shares Index futures closed at 8,903 points, 61 points higher than the previous day.

Commodity markets showed divergence: gold slightly declined by 0.15% to $4,332.5 per ounce; copper prices continued to be supported by supply tightness expectations, with London copper futures hitting a record $11,952 per ton last Friday, and NY copper futures up 34% this year.

The U.S. dollar index slightly increased to 98.4, USD/JPY fell 0.08%, and EUR/USD weakened by 0.14%.

In cryptocurrencies, Bitcoin fell 0.29% in 24 hours to $936,600; Ethereum rose 2.55% to $3,270.

Inflation Data Authenticity Sparks Industry Discussion

Despite the overall positive CPI data, several economists questioned its authenticity. The housing component, the largest part of CPI, remained flat over two months, raising doubts in the market. Capital Economics economist Ashworth pointed out that the sudden stagnation in rent and other service prices during non-recession periods is unusual, and we need to wait for December data to confirm whether this is a statistical fluctuation or a genuine slowdown in inflation.

Morgan Stanley economist Gapan believes the data may reflect weakness in goods and services markets, but part of this is due to methodological adjustments, with the Bureau of Labor Statistics possibly using historical data in some categories and assuming zero inflation.

Central Bank Policy Shift and Rate Cut Cycle Discussion

The Bank of England announced a 25 basis point rate cut to 3.75% on Thursday, the lowest since February 2023, aligning with market expectations. However, the voting result was 5-4, indicating internal disagreement. Governor Bailey voted for the rate cut, believing the downtrend in inflation has been established, but noted that subsequent decisions will become more difficult, and the pace of rate cuts is expected to slow at some point.

The European Central Bank maintained interest rates, with deposit rates anchored at 2%. According to sources, after eight rate cuts, ECB officials believe the rate cut cycle is likely over unless a major shock occurs, and rates should remain at current levels.

Market Risk Alerts and Future Outlook

Deutsche Bank’s latest global survey shows that AI-related valuation risks have become the single biggest threat to market stability in 2026, with 57% of respondents citing the risk of a sharp decline in tech stock valuations. The second is the risk of the new Fed Chair pushing for aggressive rate cuts. Meanwhile, about 71% of investors prefer to allocate to other parts of the U.S. stock market rather than the “Big Seven” tech giants.

BHP CEO predicts copper supply shortages will continue into next year and even until 2030, due to fewer new mine discoveries and smaller scale. UBS expects copper prices could reach $13,000 per ton by the end of the year.

Company Updates

Nike dropped nearly 10% after hours to $59.20, with second-quarter net profit of $792 million, down 32% year-over-year, and revenue of $12.43 billion, with a growth rate of only 0.6%.

Meta is secretly developing a new image and video AI model codenamed Mango, expected to be released in the first half of 2026. Oracle and OpenAI’s Michigan data center project received power approval, with a total capacity exceeding 8 gigawatts, and an investment of over $45 billion expected over the next three years.