The major A-share indices continued their downward adjustment on Tuesday, with the ChiNext Index falling more than 1%. Trading volume across the two exchanges shrank further to 2.57 trillion yuan.
Daily Perspective
The three major Shanghai and Shenzhen indices continued their correction, with the ChiNext Index declining over 1%. The latest U.S. CPI data for May showed a year-on-year acceleration to 4.2%, primarily driven by energy costs. However, the core CPI reading came in below expectations, tempering market expectations for an imminent interest rate hike. Despite high inflation and robust employment data, markets are currently focused on timing the potential rate hike, with expectations not intensifying further after this data release. Attention should turn to the upcoming Federal Reserve meeting, focusing on any changes to its dovish language and the updated dot plot. Geopolitical tensions, such as those involving Iran, continue to inject uncertainty into energy prices. If energy-driven inflation spreads more broadly, the probability of a rate hike could increase again. Overseas interest rate volatility is putting pressure on valuations, suggesting domestic equity markets may remain in a weak and volatile state in the near term. For portfolio positioning, a defensive strategy anchored in high-dividend stocks is advisable. Opportunities in high-growth technology sectors may be worth revisiting once current trading congestion eases.
Market News
On June 10th local time, the U.S. Department of Labor reported that the Consumer Price Index (CPI) rose 4.2% year-on-year in May, up from 3.8% in April, marking the highest level since May 2023. The month-on-month increase was 0.5%. The core CPI, which excludes food and energy, rose 2.9% year-on-year and 0.2% month-on-month.
In summary, the U.S. inflation rate was largely in line with market expectations, with energy prices being the primary driver, surging 23.5% year-on-year. Gasoline prices alone soared 40.5%, contributing over 60% to the monthly CPI increase. While expectations for a rate hike had risen following strong non-farm payroll data last week, the market is currently pricing in a 25 basis point hike by the Fed in December this year. The Fed's ultimate decision will depend on the inflation outlook, making it crucial to monitor next month's CPI data and the central bank's policy meeting scheduled for next week.
In the early hours of June 11th local time, Iran's Khatam al-Anbiya Central Headquarters announced the immediate closure of the Strait of Hormuz to all vessels, including oil tankers and commercial ships, citing regional instability. Iran stated this action was a direct response to repeated U.S. violations of ceasefire agreements.
In summary, Iran's announcement to completely shut the Strait of Hormuz represents a significant escalation of geopolitical tensions in the Middle East. The U.S. military quickly denied the closure, stating commercial traffic was proceeding normally, leading to conflicting reports. This uncertainty has significantly increased the geopolitical risk premium for the energy sector. Investors should closely monitor third-party verification of the actual shipping conditions in the strait.
The Ministry of Industry and Information Technology recently issued the "Implementation Opinions on Innovative Development of 'Artificial Intelligence + Information and Communications' (2026-2028)." The document proposes strengthening R&D for high-end optoelectronic chips and devices, with a focus on breakthroughs in technologies and products such as high-speed photonic chips, high-speed forwarding/switching chips, all-optical switching devices, and co-packaged optics. The target by 2028 is to develop over 30 high-value application scenarios and achieve a coverage rate of no less than 75% for metropolitan computing power within a 1-millisecond latency circle.
In summary, the policy document clearly identifies high-end optoelectronic chips and devices as a core focus for development, indicating that R&D and validation for products like high-speed photonic chips and all-optical switches will receive policy support. From an industry chain perspective, this is expected to further solidify the medium-to-long-term demand outlook for segments like optical communication chips, optical modules, and optical devices. Furthermore, the opinion's emphasis on developing new terminals like AI phones and AI computers could inject fresh growth momentum into the consumer electronics supply chain.
Market Recap
On June 11th, the three major A-share indices closed lower. At the close, the Shanghai Composite Index was at 3987.01 points, down 0.16%. The Shenzhen Component Index was at 14851.98 points, down 0.68%. The ChiNext Index was at 3811.25 points, down 1.13%. The STAR 100 Index rose 0.74% to 1904.93 points. Among Shenwan primary industries, Nonferrous Metals, Building Materials, and Household Appliances led the gains, rising 1.83%, 1.10%, and 0.93% respectively. Media, Computers, and Communications led the declines, falling 3.48%, 3.14%, and 2.14% respectively. 1,370 stocks advanced while 4,070 declined.
Capital Flows
Total market turnover was 2,575.142 billion yuan, lower than the previous trading day. The balance of margin trading and securities lending closed at 2,879.115 billion yuan yesterday, also down from the prior session.
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