Preview of US Stock Market | The three major stock index futures fell together. AI inflation ignited concerns of demand backlash. Storage chip and optical communication stocks fell before market opening.

Pre-market market trends 1. On June 26th (Friday) pre-market, the futures of the three major US stock indexes all dropped. As of the time of writing, Dow Jones futures fell by 0.07%, S&P 500 index futures fell by 0.50%, and Nasdaq futures rose and fell by 1.23%. 2. As of the time of writing, the German DAX index fell by 1.26%, the UK FTSE 100 index fell by 0.85%, the French CAC 40 index fell by 0.97%, and the European Stoxx 50 index fell by 0.87%. 3. As of the time of writing, WTI crude oil fell by 2.43% to $70.17 per barrel. Brent crude oil fell by 2.54% to $73.58 per barrel. Market News Apple Inc., Microsoft Corporation raise prices as a dangerous signal! AI inflation fears may dampen demand. On Thursday, Apple Inc. and Microsoft Corporation raised prices for their products citing significant increases in storage and memory costs. The price hikes from these companies indicate that the upstream cost increases have exceeded the companies' ability to absorb them, and the cost of AI is starting to flow from data centers to consumers. The market is questioning how long upstream profits can hold if consumers are unwilling to bear the cost of AI. The price increases from Apple Inc. and Microsoft Corporation release a signal indicating that the strengthening of industry pricing power may come at the expense of future demand, prompting a comprehensive re-pricing of AI-related semiconductor stocks by the market. Charu Chanana, Chief Investment Strategist at Shengbao Market, said, "The storage chip market still has sustained momentum, but positive factors have become more selective, and negative factors are covering a broader market." "The risk is that today's stronger storage chip boom may drag down the entire AI industry chain tomorrow, and the market has already started pricing this in." Strong dollar storm returns! Federal Reserve under Powell crushes devaluation trading "US exceptionalism" back in focus. Under Powell's leadership, the Federal Reserve has put stable prices and the transformation of the Fed's expectations management mechanism into a "less communication mode" back at the center of its monetary policy, leading to a strong US dollar, poised to record one of its best months in over a year. As of the midpoint of the year, the US dollar has recorded a 3% increase, making it the top-performing major currency. Top forex market strategists from large banks such as JPMorgan Chase, Bank of America Corp, and Goldman Sachs Group, Inc. have expressed strong bullish confidence in the US dollar exchange rate following Powell's pledge to restore price stability and stimulate market interest rate bets. Additionally, Goldman Sachs Group, Inc., Standard Chartered, and Deutsche Bank AG have emphasized that AI is enhancing US economic growth expectations, corporate profitability, and stock market returns, attracting global capital to continue flowing into US assets, making the US dollar a major beneficiary of future AI profits. Powell's "credibility gamble": saying the harshest words, may not need to raise the highest rates. The important indicator measuring long-term inflation expectations, the 10-year breakeven inflation rate, has fallen from over 2.5% in mid-May to about 2.2% this week, hitting a low point in over a year. Market participants point out that this decline is influenced by the drop in oil prices back to levels before the US-Iran conflict and reflects the stronger signals released by the latest Federal Reserve meeting. Several large asset management institutions believe that Powell's emphasis on curbing rising prices is strengthening his credibility in the market and reducing long-term inflation expectations. Fidelity International fund manager Reid pointed out that the decline in inflation expectations has exceeded the range that can be explained by oil price fluctuations alone. He believes that this mainly stems from the central bank's more hawkish stance, "allowing the Fed to gain more credibility in the market in combating inflation." Barclays PLC Sponsored ADR's US inflation strategy director Hill noted, "The hawkish (Fed meeting) and the temporary resolution of the Iran war have reduced the perceived inflation risk in the market, leading to a significant drop in market inflation expectation indicators." Spot gold briefly falls below $4000, has the gold bull market ended? On Friday, spot gold briefly fell to $3,983.32 per ounce, but has since risen to $4046 per ounce as of the time of writing. Data shows that gold prices have retreated by over 25% from their high of $5,321 per ounce in early March. The current market panic mainly stems from two factors: inflation fears, with the US-Iran conflict pushing up oil prices and inflation, leading to concerns about the resilience of US inflation and forming expectations of monetary tightening; a hawkish turn from the Federal Reserve, with the market now perceiving the Fed's policy focus as "controlling inflation". Futures markets have already priced in rate hikes by the Federal Reserve in 2026 and 2027, aiming to restore the credibility of the US dollar and ultimately pressuring gold prices. Some analysts point out that gold falling below $4000 per ounce does not mean the end of the long-term gold bull market, but rather a phase of correction following a rapid rise. Looking into the medium to long term, central banks globally are continuing to increase their gold holdings, the high debt environment worldwide, and the trend of diversifying international reserves remain unchanged, indicating that gold still holds strategic value. It is expected that gold will transition from a unilateral upward trend to a period of high volatility and wide fluctuations, with short-term adjustment pressure but the medium to long-term trend will depend on Federal Reserve policies, US dollar movements, and changes in global political risks. Stock News Storage chip and optical communication stocks fall. In pre-market trading on Friday, Micron Technology, Inc. (MU.US) and SanDisk (SNDK.US) dropped nearly 5%, Western Digital Corporation (WDC.US) dropped nearly 4%, and Seagate Technology Holdings PLC (STX.US) fell over 3%. As for optical communication stocks, Tower Semiconductor Ltd (TSEM.US) fell over 6%, Marvell Technology, Inc. (MRVL.US), Coherent (COHR.US), AXT Inc (AXT.US) dropped nearly 4%, Credo Technology (CRDO.US), Astera Labs (ALAB.US), Lumentum (LITE.US), Nokia Oyj Sponsored ADR (NOK.US) fell over 3%, and Corning Inc (GLW.US) fell over 2%. Apple Inc. (AAPL.US) faces "double headwinds"! iPhone sales in China fell by 19% in a single month, storage price surge forces Mac and iPad price hikes. In a recent research report, UBS Group AG cited statistics from the China Academy of Information and Communications Technology, emphasizing that Apple Inc.'s iPhone sales in the Chinese market in May fell by a significant 19% year-on-year. This data further burdens Apple Inc., which has been under pressure from the surge in storage chip prices and shortages. On Thursday, Apple Inc. raised prices for most of its consumer electronics products (excluding the iPhone product line) attributing these changes to unprecedented demand for memory, solid-state drives, and other storage chip components driven by large-scale acquisitions by artificial intelligence data centers. Revolutionizing the $1.6 trillion market? SpaceX (SPCX.US) plans to launch "Starlink" mobile service, targeting the big three US telecommunication giants. According to sources, Elon Musk's SpaceX has revealed to investors its plan to launch a new Starlink mobile service for American consumers. This move indicates that the space giant known for reusable rockets and satellite internet is stepping into the core territory of Verizon (VZ.US), AT&T (T.US), and T-Mobile (TMUS.US), directly competing with them. SpaceX President and Chief Operating Officer Gwynne Shotwell stated during a recent initial public offering (IPO) roadshow that the company is considering launching a retail Starlink product and may establish its own ground mobile network in the US. ON Semiconductor (ON.US) to acquire Synaptics (SYNA.US) for $6.2 billion in an all-stock deal, marking a 19% premium and targeting smart systems. ON Semiconductor Corporation has agreed to acquire Synaptics, specializing in smart device semiconductors, in an all-stock deal valued at around $6.2 billion. According to the company statement, holders of Synaptics shares will receive 1.35 shares of ON Semiconductor common stock per Synaptics share, representing approximately a 19% premium based on the closing prices of ON Semiconductor and Synaptics over the past 10 trading days. A year ago, ON Semiconductor abandoned its efforts to acquire Allegro Microsystems Inc. for $6.9 billion after determining "there was no viable path." For the latest acquisition target, the company stated that it is seeking to expand its business from power and sensing fields to smart systems. As of the time of writing, Synaptics was up over 3% in pre-market trading on Friday. Bitcoin crash leads to a $13 billion unrealized loss ceiling! Market questions Strategy's (MSTR.US) financing model. According to reports, Strategy is currently facing over $13 billion in unrealized losses based on market value. According to fair value accounting standards, if this unrealized loss were to be included in the income statement, it could lead to significant quarterly losses for the company. The expanding unrealized losses have also coincided with a sharp decline in Strategy's stock price. Strategy has long relied on issuing securities such as stocks and preferred stocks for financing, and then using the raised funds to continuously purchase Bitcoin. This model has helped the company become one of the largest corporate holders of Bitcoin globally and a significant source of incremental funds driving the continuous rise in the price of Bitcoin. However, with Bitcoin prices remaining below $60,000 for an extended period, rising financing costs for the company, and a significant drop in the price of its preferred stock STRC, more investors are starting to question whether this financing model can continue to operate. FedEx Corporation's freight division (FDXF.US) makes its debut post-split: Q4 operating profit sharply declines, future focus on high-profit niche markets. The company's fourth-quarter revenue reached $2.4 billion, a 4.8% year-on-year increase, while operating profit was $158 million, a 66.9% year-on-year decline. Adjusted operating profit was $363 million, a 23.9% year-on-year decline. The operating profit margin was 6.6%, the adjusted operating profit margin was 15.1%, compared to 20.8% in the same period last year. FedEx Corporation's freight division is expanding into new businesses such as data center infrastructure, fresh groceries, and healthcare to plan for its future as a newly independent company. CEO John Smith stated that, in the past year leading up to its spin-off from the parcel delivery giant FedEx Corporation (FDX.US) earlier this month, FedEx Corporation's freight division has been building a dedicated sales team to win business in niche markets historically less explored but with attractive profit margins. Important Economic Data and Events Preview 22:00 Beijing time - Final value of the University of Michigan Consumer Confidence Index for June 23:30 Beijing time - Speech by 2026 FOMC voting member and Minneapolis Fed President Kashkari