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Group 1: Dollar Index and Market Expectations - The dollar index (DXY) rose by +0.61% on Tuesday, reaching a 3.25-month high, driven by soaring oil prices which increased inflation expectations and reduced the likelihood of additional Fed rate cuts [1] - Market expectations for Fed easing have decreased, with money markets now pricing in 37 basis points of Fed rate cuts this year, down from 60 basis points last Friday [1] - A slump in stocks on Tuesday has increased liquidity demand for the dollar [1] Group 2: Federal Reserve and Interest Rates - NY Fed President John Williams indicated that further Fed interest rate cuts may be necessary if inflation slows after the impact of tariffs has diminished [2] - Kansas City Fed President Jeff Schmid emphasized that inflation has been above the Fed's target for nearly five years, suggesting a need for vigilance [3] - Swaps markets are currently pricing a 2% chance of a -25 basis point rate cut at the next policy meeting on March 17-18 [3] Group 3: Eurozone Economic Indicators - The EUR/USD fell to a 3.25-month low, down by -0.56%, as the dollar's strength negatively impacted the euro [5] - A +24% surge in European natural gas prices to a 3-year high poses risks to economic growth and inflation in the Eurozone, which are negative factors for the euro [5] - The Eurozone's February CPI rose by +1.9% year-on-year, exceeding expectations of +1.7%, while core CPI rose by +2.4% year-on-year, stronger than the anticipated +2.2% [5] - Swaps are discounting a 0% chance of a -25 basis point rate cut by the ECB at its next policy meeting on March 19 [5] Group 4: Japanese Yen Performance - The USD/JPY rose by +0.09%, with the yen falling to a 5-week low against the dollar due to rising crude oil prices, which negatively affect Japanese economic growth [6] - An unexpected increase in Japan's January jobless rate has also been bearish for the yen [6] - Higher T-note yields on Tuesday have put additional pressure on the yen [6]

Group 1: Dollar Index and Market Expectations - The dollar index (DXY) has increased by +1.29%, reaching a 3.25-month high, driven by rising oil prices which have surged to an 8.5-month high, thereby boosting inflation expectations and reducing the likelihood of additional Fed rate cuts [1] - Market expectations for Fed easing have decreased, with money markets now pricing in 37 basis points of Fed rate cuts this year, down from 60 basis points last Friday [1] Group 2: Federal Reserve Commentary - NY Fed President John Williams indicated that further Fed interest rate cuts may be necessary if inflation slows down after the impact of tariffs has diminished [2] - Kansas City Fed President Jeff Schmid emphasized that inflation has been above the Fed's target for nearly five years, suggesting a need for vigilance [3] Group 3: Eurozone Economic Indicators - The Eurozone's February CPI rose by +1.9% year-on-year, surpassing expectations of +1.7%, while the core CPI increased by +2.4% year-on-year, exceeding the forecast of +2.2% [6] - A significant surge of +24% in European natural gas prices to a 3-year high poses risks to economic growth and inflation in the Eurozone, negatively impacting the euro [5] Group 4: Currency Movements - The EUR/USD pair has decreased by -1.30%, reaching a 3.25-month low, primarily due to the dollar's strength [5] - The USD/JPY has risen by +0.27%, with the yen falling to a 5-week low against the dollar, influenced by rising crude oil prices and an unexpected increase in Japan's jobless rate [7]

Core Insights - February has shown increased volatility compared to January, with investors adopting a "sell first, ask questions later" strategy due to AI-driven disruption fears [1] - The U.S. Consumer Price Index (CPI) release provided some relief by easing inflation concerns, leading to expectations that the Federal Reserve may start cutting rates around mid-year [1] Inflation Data - Consumer inflation rose 2.4% year-over-year in January, down from 2.7% in December, returning to its April 2025 level [2] - Core CPI increased 2.5% annually, marking its lowest reading since April 2021, while economists had anticipated both headline and core inflation to be at 2.5% [2] Federal Reserve Rate Expectations - Following the softer-than-expected January inflation data, U.S. interest rate futures increased the probability of a June rate cut to approximately 70%, up from 64% prior to the report [4] - The CME FedWatch tool indicates a 50.7% likelihood of interest rates being lowered to 3.25-3.5% in June 2026, an increase from 44.5% a month earlier, with expectations for July strengthening to an 80.4% likelihood of a rate cut [5] Investment Opportunities in ETFs - Small-cap stocks, which are heavily reliant on external borrowings, could significantly benefit from lower interest rates, enhancing capital availability and allowing for refinancing of existing debt [7] - Suggested small-cap ETFs include iShares Core S&P Small-Cap ETF (IJR), iShares Russell 2000 ETF (IWM), and Vanguard Small Cap ETF (VB), all rated Zacks ETF Rank 2 (Buy) [8] - Financial ETFs are expected to gain from anticipated Fed interest rate cuts, which could lower capital costs for banks and boost loan activity [9] - Recommended financial ETFs include State Street Financial Select Sector SPDR ETF (XLF), Vanguard Financials ETF (VFH), and iShares U.S. Financials ETF (IYF), with XLF and VFH rated Zacks ETF Rank 1 (Strong Buy) [12] - The utilities sector, being capital-intensive, will also benefit from reduced financing costs, making utility ETFs like Utilities Select Sector SPDR Fund (XLU), Vanguard Utilities ETF (VPU), and iShares U.S. Utilities ETF (IDU) attractive options [13][14]

Market Overview - US futures showed modest positivity in early morning trading, with the Dow Jones futures up 0.1%, indicating potential further record territory [1] - S&P 500 futures also increased by 0.1%, while Nasdaq 100 futures rose by 0.2% [2] Previous Market Performance - The Dow achieved its third consecutive record close, finishing up 52 points or 0.1% at 50,188 [3] - In contrast, the S&P 500 fell by 0.3% to 6,942, the Nasdaq decreased by 0.6% to 23,102, and the Russell 2000 lost 0.4% to close at 2,679 [3] Economic Indicators - The market is awaiting the delayed January non-farm payrolls (NFP) report, expected to show an increase of 66,000 jobs, up from 50,000 in December [7] - The dollar index (DXY) was down 0.1% at 96.72, reflecting a softer dollar ahead of the jobs report [5] Commodity Prices - Crude oil prices strengthened, rising by 2.1% to $65.32 per barrel of West Texas Intermediate [6] - Precious metals such as gold, silver, and copper also saw price increases [6] Analyst Insights - Market analysts suggest that a weak jobs report could influence Federal Reserve policy, with a 40% chance of an interest rate cut in March or April being priced in by the markets [7] - There is a noted divergence between the strong GDP growth rate of 4.4% for Q3 and the weakness in the jobs market, indicating potential economic concerns [8] - A weak NFP report followed by weak inflation data could push the Fed closer to a rate cut [9]

Technical Analysis - The wide support zone is identified between $4744.34 and $4427.82, with a tighter support cluster at $4532.39 to $4427.82 due to the uptrend line from the main bottom at $3886.46 [1] - The uptrend line is moving at a rate of $43.06 per week, indicating a relatively tight support given the current volatility [1] Market Patterns - Gold maintains a trending pattern of higher tops and higher bottoms, despite a recent closing price reversal top that shifted momentum temporarily [2] - The market's sideways movement will require reevaluation of time, but as of the last close, this is not seen as an immediate concern [2] Fundamental Drivers - Three main fundamental drivers are identified: the U.S. economy, Fed rate cut odds, and the geopolitical situation between Iran and the U.S. [3] - The long-term foundation remains strong, supporting a "buy the dip" strategy rather than focusing on short-term trades [3] Central Bank Activity - Central bank buying is highlighted as a key long-term foundation, with China's central bank extending its gold buying campaign for the 15th consecutive month [4] - This ongoing buying activity is viewed positively for long-term investors, although it is noted that the information is somewhat dated as of February 9 [4]

Market Overview - The A-share market experienced a collective decline, with the Shanghai Composite Index down by 0.64%, Shenzhen Component Index down by 1.44%, and ChiNext Index down by 1.55% [1] - The total trading volume across the three markets was 21,943 billion yuan, a decrease of 3,090 billion yuan compared to the previous day, with over 3,700 stocks declining [1] Sector Performance - "Old economy stocks" showed a strong recovery, with sectors such as banking, tourism, and medical beauty performing well, while "new economy stocks" faced significant declines, particularly in solar energy and AI hardware [1] - The beauty care, banking, and food and beverage sectors exhibited strong performance, while non-ferrous metals, power equipment, and communication sectors showed weakness [1] Investment Trends - Micro-cap stocks continued to lead the market, with large-cap stocks outperforming small-cap stocks, indicating a shift in market sentiment towards more stable investments [1] - The market is witnessing a rotation in investment style, with large-cap and value stocks beginning to replace small-cap and growth stocks, suggesting a comprehensive rebound [1] Traditional Sector Outlook - The traditional sectors are expected to maintain strength leading up to the Spring Festival, driven by increased risk aversion and a seasonal uptick in demand for products like liquor and tourism [5] - Historical trends indicate that funds often position themselves in traditional sectors ahead of the Spring Festival to capitalize on post-holiday demand [5] Long-term Investment Logic - The long-term investment logic for technology and cyclical sectors remains intact, with opportunities for low-cost entry still available [5] - The main themes for the A-share market in the coming year are expected to revolve around technology, including AI and robotics, and cyclical sectors such as non-ferrous metals and coal, benefiting from anticipated global economic recovery and domestic policy improvements [5]

Core Insights - The main takeaway from Federal Reserve Chair Jerome Powell's news conference is the removal of the balance of risks from the Fed's labor market assessment [1] Group 1 - Jeffrey Rosenberg, a portfolio manager at BlackRock, emphasizes the significance of this change in the context of interest rates being left unchanged [1]

Summary of Aluminum Corporation of China (Chalco) 2026 Business Outlook Call Company Overview - **Company**: Aluminum Corporation of China (Chalco) - **Stock Code**: 2600.HK Key Industry Insights - **Alumina and Aluminum Prices**: - Alumina prices have been weak since Q4 2025 due to surplus supply and increased bauxite supply [2][4] - Aluminum prices have remained strong since Q4 2025, benefiting from China's capacity cap policy and rising demand [2][5] Core Business Strategies - **Focus on Aluminum Business**: - In 2026, Chalco will concentrate on its aluminum business, aiming for a 100% utilization ratio [3] - The output of metallurgical alumina is expected to align closely with aluminum consumption, with profitable sales of chemical alumina anticipated [3] - **Bauxite Production**: - Chalco plans to increase its bauxite output from Guinea year-over-year in 2026 [3] Financial Performance and Projections - **Cost Management**: - Imported bauxite prices decreased quarter-over-quarter in Q1 2026, while domestic prices remained stable [4] - Labor costs increased in Q4 2025 due to salary and bonus recognition [4] - **Profitability Outlook**: - The profit from the alumina segment is expected to be lower quarter-over-quarter, while the aluminum segment is projected to be higher in Q4 2025E [2] - Chalco's expected net profit for Q4 2025 is estimated at RMB 2.9 billion, with an impairment loss of approximately RMB 2 billion anticipated [8] Market Valuation - **Target Price**: - The target price for Chalco's H-share is set at HK$15.94, based on a price-to-book ratio of 2.81x for 2026E, reflecting stronger-than-historical-average return on equity [9] Risks and Challenges - **Downside Risks**: - Potential risks include lower-than-expected aluminum and alumina prices, higher-than-expected costs, and increased impairment losses [10] Investment Recommendation - **Rating**: - Maintain a "Buy" rating, with Chalco identified as a top pick in the coverage [1][6] Additional Information - **Market Capitalization**: - Approximately HK$256.03 billion (US$32.83 billion) [6] - **Expected Total Return**: - 23.1%, with an expected dividend yield of 4.6% [6] This summary encapsulates the critical insights and projections from the 2026 Business Outlook Call for Aluminum Corporation of China, highlighting the company's strategic focus, financial outlook, and market positioning.

Economic Indicators - The December consumer price index (CPI) report showed core CPI rose 0.2% month-over-month and 2.6% year-over-year, both below pre-market estimates of 0.3% and 2.8% respectively [1] - The monthly headline CPI increased by 0.3% in December, resulting in an annual rate of 2.7%, which was in line with economists' forecasts [1][2] Federal Reserve Outlook - The steady inflation and a stable jobs market are likely to lead the Federal Reserve to maintain interest rates during their first meeting of the year on January 28-29 [2] - Fed funds futures are currently pricing in two quarter-point cuts starting in June 2024 [2] Earnings Season - The earnings season commenced with JPMorgan Chase reporting better-than-expected results for the December quarter, although the stock did not show significant movement [3] - Delta Airlines experienced a 4% decline in premarket trading due to mixed earnings results [3][4] Sector Performance - Defense stocks, particularly L3Harris Technologies, surged 13% after announcing plans for an IPO of its missile solutions business in partnership with the U.S. Defense Department [5] - Chip manufacturers Intel and AMD saw stock increases following an upgrade to overweight by KeyBanc, citing a potential upside of over 30% due to a memory supercycle and strong data center demand [5] - Health sciences company Revvity reported better-than-expected preliminary results, contributing to its stock strength early in the session [5]