CITIC Construction Investment: U.S. stocks have officially entered risk-aversion mode and oil prices are pointing to $100. Provided by Zhitong Finance

Zhitong Finance APP learned that CITIC Securities issued a research report stating that the rise in U.S. stocks starting in 2023 will benefit from the smooth decline in inflation. This logic has been broken since Q2, and U.S. stocks will enter a risk-aversion mode. The short-term gold price of US$2,400 has fully reflected the pricing of the escalation of the situation in the Middle East. At the same time, expectations of a rate cut by the Federal Reserve continue to cool down, and gold operates in a moderate band above US$2,400. In the medium term, there are signs of U.S. inflation rising again in the future. Once the rebound trend in inflation is established, gold will follow the rise, and U.S. gold stocks may shift from the current resonance to divergence, and gold will have relative gains relative to U.S. stocks. The situation in the Middle East escalated, and oil prices pointed to $100.

The main views of CITIC Construction Investment are as follows:

U.S. stocks: U.S. stocks officially enter risk-aversion mode

The U.S. manufacturing boom rose above the boom-bust line in March, and non-farm employment was higher than expected. However, the service industry boom fell, wage growth fell, and the U.S. CPI rebounded beyond expectations. After losing fiscal support, the negative impact on the economy from rapid interest rate increases in the early stage will continue. It is expected that the overall U.S. economy will mainly decline in the next quarter, and the manufacturing industry is structurally better than the service industry.

The U.S. CPI data for March released in April continued to exceed expectations, commodity prices rose, and signs of secondary inflation have emerged. The rise in U.S. stocks starting in 2023 will be due to the smooth decline in inflation. This logic has been broken since Q2. U.S. stocks will enter a risk aversion mode and it is recommended to avoid it.

Gold: Gold operates in a moderate band above US$2,400, and is still bullish in the medium term

The short-term gold price of US$2,400 has fully reflected the pricing of the escalation of the situation in the Middle East. At the same time, expectations of a rate cut by the Federal Reserve continue to cool down, and gold operates in a moderate band above US$2,400. In the medium term, there are signs of U.S. inflation rising again in the future. Once the inflation rebound trend is established, gold will have further room to rise in the future. In periods of high inflation, gold has more credit hedging and anti-inflation properties than U.S. stocks. Gold and U.S. stocks may turn from the current resonance to divergence, and gold will have relative returns relative to U.S. stocks.

Crude oil: Tensions in the Middle East escalate, oil prices point to $100

On the demand side, OPEC said in its latest monthly crude oil market report that global average daily oil demand is expected to increase by 2.25 million barrels in 2024 compared with 2023. Global average daily oil demand will increase by 1.85 million barrels in 2025 compared with 2024.

On the supply side, OPEC’s monthly report showed that OPEC’s crude oil production in March was approximately 26.86 million barrels per day, an increase of 10,000 barrels per day from February. U.S. crude oil production fell to 13.1 million barrels per day in March. Saudi crude oil increased to 9.04 million barrels in March.

The conflict between Iran and Israel escalated. At the same time, U.S. inflation data in March continued to exceed market expectations. OPEC crude oil production from January to March was significantly lower than the level at the end of last year. OPEC+ members led by Saudi Arabia and Russia agreed to voluntarily reduce production by 2.2 million barrels per day. The agreement was extended to the end of June this year. Based on the above information, driven by supply, oil prices will maintain an upward trend and are expected to hit $100 due to the Iran-Israel conflict.

risk warning:The results of this report are all calculated based on the pricing models of corresponding major categories of assets, so you need to be alert to the risk of model failure; history does not represent the future, and you need to be alert to the risk that historical laws will no longer be repeated; the model results are only for research reference and do not constitute investment advice; currently overseas Regional conflicts are not over yet, and we still need to be wary of the risk of large-scale escalation of conflicts in some regions; the United States raised interest rates rapidly in the early stage, and the U.S. economy has a certain degree of resilience. We need to be wary of the lagging impact of weakened U.S. fiscal stimulus combined with a sharp rise in interest rates in the future; future inflation The center has moved higher than in the past 10 years, and we are wary of the risk of U.S. bond interest rates remaining high for a long time. At present, China’s economy is greatly affected by domestic and international factors, and it is still necessary to be alert to the risks caused by domestic economic growth that is less than expected.