Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - The sustainability of the rebound remains to be confirmed, and it is advisable to embrace gold. The current primary contradiction is not employment and inflation but tariff policies. After a significant valuation correction, the PE has become reasonable but not undervalued. Whether corporate earnings expectations will be adjusted due to tariffs depends on the ongoing Q1 earnings reports, and whether there will be an earnings correction in the future requires further confirmation. Although the 90 - day delay in tariff implementation has provided some relief to the market, uncertainties still persist. Therefore, a defensive approach is the main strategy, and it is recommended to invest in gold, which has a hedging property [2][3]. Summary According to Relevant Catalogs Macro Data - As of the week ending April 5, the number of initial jobless claims was 223,000, in line with the forecast, and the four - week moving average remained unchanged, indicating overall stability in the employment market. In March, the CPI was 2.4% year - on - year, better than the expected 2.5%; month - on - month, it was - 0.1%, better than the expected 0.1%. The core CPI was 2.8% year - on - year, better than the expected 3%; month - on - month, it was 0.1%, better than the expected 0.3%. In April, the preliminary reading of the 1 - year inflation expectation in the University of Michigan survey soared to 6.7%, a new high since 1981, higher than the expected 5.2% and the previous value of 5%; the preliminary reading of the 5 - year inflation expectation was 4.4%, higher than the expected 4.3% and the previous value of 4.1%. The preliminary reading of the consumer confidence index was 50.8, significantly lower than the expected 53.5 and the previous value of 57 [3][8][9]. Market Sentiment - The US Economic Policy Uncertainty Index (EPU) reached 678.44 points, with a weekly moving average of 676.57 points, a new high since 2018, mainly due to the inconsistent tariff policies of the Trump administration, which disrupted market expectations and caused significant market fluctuations. The retail sentiment indicator compiled by the American Association of Individual Investors (AAII) showed that 58.9% of US retail investors were bearish on the stock market, while 28.5% were bullish, with a bull - to - bear ratio of 0.48, an improvement from the previous value (0.35), but pessimism still prevailed. The Fear and Greed Index remained in the 'Extreme Fear' zone for three consecutive weeks, closing at 13 points; among its seven sub - indicators, only 'Junk Bond Demand' showed 'Fear', while the other six showed 'Extreme Fear' [3][16][17]. Global Market - The global equity market rose 3.4% last week, with developed markets (4.4%) outperforming emerging markets (- 3.9%), and the US stock market led the global market. Gold continued its upward trend, rising 7.2% last week, and it has been rising across all observed time frames. Bitcoin was weak, with a weekly increase of - 0.3% [3][22]. Industry Performance - Among the 36 secondary industries in the US stock market, 31 rose and 5 fell. Industries such as national defense and military, non - ferrous metals, and semiconductors had relatively large increases. The absolute values of the top three gainers were much larger than those of the bottom three. Eleven secondary industries outperformed the S&P 500 index (5.7%) [24]. S&P 500 Component Stocks - Among the S&P 500 component stocks, 372 stocks rose last week, accounting for 74%, and the number of rising stocks increased significantly compared to the previous week. The top - ranked stocks in terms of gains were NEWMONT, BROADCOM, CONSTELLATION ENERGY, PALANTIR TECHNOLOGIES, GE VERNOVA, etc. Among the 20 core component stocks, Broadcom led with a weekly increase of 24.4%, while ExxonMobil performed the worst with a weekly decrease of - 1.2% [26][28]. Volume and Price Indicators - The strong secondary industries were semiconductors, software services, medical equipment and services, etc. The estimated average daily capital intensity of the semiconductor industry last week was approximately $325.4 billion, ranking first. Last week, the estimated capital inflows were relatively concentrated in stocks such as NVIDIA, TESLA, and PALANTIR TECHNOLOGIES [30][32]. Market Valuation - In the past week, the static PE of the S&P 500 was 24.3 times, the Bloomberg Forward PE rose slightly from 19 times to 19.8 times, an increase of 4.3%; the Bloomberg - predicted EPS decreased slightly from $268 to $266, a decrease of 0.5% [34]. Gold Industry - As of April 10, 2025, the price of the gold industry was in the range of 10.7x P/E to 19.3x P/E, at a relatively low level; the P/E in Q2 2025 is expected to rebound significantly, and the earnings per share (EPS) in Q2 2025 is expected to rebound significantly. In the short term, the gold price has shown obvious fluctuations due to tariff policies. In the long term, factors such as the expectation of more severe stagflation in the US after the tariff increase, global economic and political uncertainties, and the gold - buying demand of emerging market central banks may support the gold price [37][41].

Macro Data - U.S. new home sales in February were seasonally adjusted at an annualized rate of 676,000 units, a month-on-month increase of 1.8%, slightly below the expected 680,000 units, and above the previous value of 664,000 units[7] - Initial jobless claims for the week ending March 22 were 224,000, better than the expected 225,000 and the previous value of 225,000; the four-week moving average decreased by 2.0% to 223,500, indicating overall stability in the job market[8] - February core PCE year-on-year increased to 2.8%, above the expected 2.7% and the previous value of 2.6%; month-on-month, it rose by 0.4%, exceeding the expected 0.3%[8] Market Sentiment - The Fear and Greed Index briefly improved before entering the 'extreme fear' zone again, closing at 22 points; only two of its seven components (volatility and junk bond demand) were neutral, while the other five showed extreme fear[16] - Global equity markets fell by 1.4% for the week, with emerging markets down 0.9% and developed markets down 1.5%[16] U.S. Stock Market Performance - The S&P 500 index fell by 1.5% for the week, with only 222 stocks rising, accounting for 44% of the index, a significant decrease from the previous week[23] - In terms of style, large-cap value outperformed small-cap value, while small-cap growth outperformed large-cap growth; specifically, large-cap value (Russell 1000 Value -0.5%) > small-cap value (Russell 2000 Value -1.1%) > small-cap growth (Russell 2000 Growth -2.1%) > large-cap growth (Russell 1000 Growth -2.6%)[18] Sector Performance - Among 36 sectors in the U.S. stock market, 11 sectors rose while 25 fell, with significant gains in sectors like business services, food and beverage, and telecommunications; 24 sectors outperformed the S&P 500 index[21] - The strongest sector was business services, with an estimated average daily capital inflow of approximately $2.37 billion, while the semiconductor sector had the weakest with an estimated average daily outflow of $103.2 billion[21] Strategy Recommendations - Despite the unexpected rise in core PCE and increasing inflation expectations, the market anticipates rate cuts in June (92% probability), September (90% probability), and December (96% probability), indicating a growing pessimism about economic prospects[21] - A defensive strategy is recommended, focusing on assets like gold (GLD) and Berkshire Hathaway (BRK_B)[21]

Group 1: Hong Kong Stock Market - The Hang Seng Index rose approximately 19.2% from January 1 to March 24, driven primarily by a valuation increase from a Forward PE of 9.7 to 11.9, contributing 23.1% to the rise[29] - The Forward EPS decreased by 3.2% during the same period, indicating that the increase in the index was mainly due to valuation recovery rather than earnings growth[30] - The current Forward PE of the Hang Seng Index is at 11.6x, which is at the lower end of the reasonable range compared to historical averages[35] Group 2: Chinese Economic Outlook - China's GDP growth target for 2025 is set at around 5%, consistent with last year's target and actual growth, supported by a combination of proactive fiscal and monetary policies[6] - The fiscal deficit rate for 2025 is planned at 4%, an increase of 1 percentage point from 2024, with total fiscal spending expected to reach 5.66 trillion yuan[9] - The CPI in February 2025 fell by 0.7% year-on-year, marking the first negative value since January 2024, while the PPI has been in negative territory for 29 consecutive months, indicating weak domestic and international demand[6] Group 3: U.S. Economic Outlook - The probability of a recession in the U.S. for 2025 is estimated at 25% according to Bloomberg economists and 23.18% according to New York Fed models, indicating a low likelihood of recession[44] - The S&P 500 index experienced a 10% decline from February 19 to March 13, with a Forward PE drop of 22.9% from 26.6 to 20.5, suggesting a return to a reasonable valuation range[40] - In non-recession years, the S&P 500 has an 84% probability of increasing, with a median annual increase of 13.41%[44]

Group 1: Macroeconomic Indicators - January CPI increased by 3.0% year-on-year, exceeding expectations of 2.9% and the previous value of 2.9%, marking the highest level in seven months [7] - Core CPI rose by 3.3% year-on-year, higher than the expected 3.1% and previous 3.2% [7] - January PPI year-on-year was 3.5%, matching the previous value and exceeding the expected 3.2% [7] Group 2: Market Performance - S&P 500 index rose by 1.5% last week, while the Nasdaq China Golden Dragon Index surged by 7.3%, marking the highest increase globally [20] - Among the 36 secondary sectors in the U.S. stock market, 27 sectors saw gains, with the top five performing sectors being Electrical Equipment, Real Estate Investment Trusts, Durable Goods, Pharmaceuticals, and Household Products [23] Group 3: Company Performance - 76% of S&P 500 companies reported actual EPS above expectations, slightly below the 5-year average of 77% but above the 10-year average of 75% [5] - Notable companies with significant stock price increases include AMD, Intel, and Airbnb, contributing to the overall positive performance of the S&P 500 [26]