After "Black Friday," US stocks staged a strong rebound tonight.
As of Beijing time early morning October 14, all three major US indices rose sharply. At the time of writing, the Dow Jones Industrial Average gained 1.27%, the Nasdaq Composite surged 2.04%, and the S&P 500 climbed 1.54%.
Major technology stocks were mostly higher. At the time of writing, Tesla rose 3.06%, Nvidia gained 2.77%, Google advanced 2.49%, Amazon increased 1.84%, Apple climbed 1.48%, Facebook rose 0.96%, and Microsoft added 0.44%.
Most popular Chinese concept stocks moved higher. At the time of writing, the Nasdaq Golden Dragon China Index jumped 3.31%. Among individual names, 21Vianet surged over 11%, GDS Holdings gained nearly 8%, NIO rose over 6%, while Alibaba and Kingsoft Cloud both advanced over 5%.
The Philadelphia Semiconductor Index quickly rallied after the opening, gaining 4.78% at the time of writing. Taiwan Semiconductor rose over 7% and Micron Technology climbed over 4%. Broadcom surged nearly 10% following news that OpenAI announced a partnership with Broadcom to jointly produce its first self-designed artificial intelligence processors.
Silver Outperforms Gold as London Market Faces Squeeze
During today's session, spot gold broke above the $4,100 per ounce level, setting a new all-time high with intraday gains exceeding $90, representing an increase of over 2%. Year-to-date, gold has gained nearly $1,500, representing an advance of over 56%.
COMEX silver futures rose as much as 7% intraday. London spot silver prices surged 3% on the 13th, approaching $52 per ounce and exceeding last week's intraday highs.
On the news front, silver faced a historic squeeze in the London market!
Driven by a historic short squeeze in London's market, spot silver prices soared to multi-decade highs on the 13th, with year-to-date gains exceeding 70%, outperforming gold.
A short squeeze occurs when artificial means drive asset prices sharply higher, causing short sellers to suffer losses.
Bloomberg reported on the 13th that concerns about insufficient liquidity in the London market pushed silver close to its historical record of $52.50 per ounce set in 1980. Business Insider reported the same day that London's physical silver inventory had fallen to multi-year lows, triggering a liquidity crunch.
According to Bloomberg, the premium of London's silver market over New York's market approached historical extremes, prompting some traders to book trans-Atlantic cargo flights to transport silver bars, seeking to profit from London's substantial premium.
Meanwhile, spot gold prices broke above the $4,100 per ounce level during the 13th's session, continuing the strong performance of eight consecutive weeks of gains and setting new all-time highs. Platinum and palladium prices also rose significantly.
Goldman Sachs analysts warned investors on the 12th to be cautious about silver's price surge. In a research report published that day, they wrote that although the Federal Reserve may cut interest rates further and silver prices may continue rising in the medium term, "in the short term, we believe silver faces greater volatility and downside risk compared to gold. Gold is the only commodity supported by structural central bank buying."
The research report stated: "Silver lacks the institutional and economic attributes that support gold. It is not included in the International Monetary Fund's reserve framework, nor does it have significant holdings in modern central bank portfolios." The report also dismissed the view that "high gold prices might prompt central banks to turn to silver."
Goldman Sachs analysts believe that central banks focus more on managing value than managing weight. This means that even if gold prices climb, policymakers will not seek relatively cheaper alternatives. Due to the lack of central bank buying as price support, even temporary reductions in investment inflows could trigger disproportionate pullbacks in silver prices.
Goldman Sachs analysts also noted that gold's scarcity is about ten times that of silver, costs 80 times more than silver, and has twice the density, making it easier to store, transport, and custody. "One billion dollars worth of gold can fit in a suitcase, while the equivalent value in silver would require an entire freight truck."
Fed Officials Set to Speak Frequently
Due to the ongoing US government shutdown, the release of several important economic data points, including the US September Consumer Price Index, has been delayed. The market is expected to focus more on earnings reports from major Wall Street financial giants scheduled for release this week, using earnings data to assess the current state of the US economy. On Tuesday local time, JPMorgan Chase, Goldman Sachs, Citigroup, Wells Fargo, and others will successively release third-quarter earnings. On Wednesday, Bank of America and Morgan Stanley will also release new earnings reports.
The Federal Reserve will release its latest Beige Book on US economic conditions this week, while multiple Fed officials will deliver speeches.
Newly appointed Philadelphia Fed President Paulson will deliver her first major speech since taking office on Monday. She will become a voting member of the FOMC starting next January.
Fed Chairman Powell is expected to speak on Tuesday afternoon, updating his economic and policy views.
Newly appointed Fed Governor Milan also plans to attend four different public events on Wednesday and Thursday.
Based on previous statements, there remains disagreement within the Fed regarding future rate cuts. However, according to the latest data from CME's "FedWatch," the probability of the Fed maintaining rates unchanged in October is 2.2%, while the probability of a 25 basis point cut is 97.8%. For December, the probability of maintaining rates unchanged is 0%, the probability of cumulative 25 basis point cuts is 2.2%, and the probability of cumulative 50 basis point cuts is 96.7%.
(Disclaimer: Article content and data are for reference only and do not constitute investment advice. Investors operate at their own risk.)
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