Understanding the Market | Non-ferrous stocks continue recent upward trend, interest rate cut expectations benefit industrial metal prices, domestic social inventory destocking is expected to accelerate

According to Zhitong Finance APP, non-ferrous stocks continue their recent upward trend. As of the time of writing, China Aluminum (02600) is up 5.77%, trading at HKD 7.51; CHINAHONGQIAO (01378) is up 4.78%, trading at HKD 26.28; JIANGXI COPPER (00358) is up 3.97%, trading at HKD 26.18; CMOC (03993) is up 3.39%, trading at HKD 13.12.

In terms of news, the U.S. CPI in August increased by 2.9% year-on-year, and the core CPI in August increased by 3.1% year-on-year, generally in line with expectations, reinforcing the market's bets on interest rate cuts by the Federal Reserve. CITIC Securities research report states that the overall year-on-year growth rate of the U.S. CPI may hover around 3% in the coming months, maintaining the forecast that the Federal Reserve will cut rates three times by 25 basis points each within the year, with rate cut trades likely being a clear main theme in the near term.

Galaxy Securities released a research report stating that expectations for a rate cut by the Federal Reserve in September are heating up, with marginal liquidity easing and pressure on the U.S. dollar index benefiting industrial metal commodity prices. From a fundamental perspective, the domestic manufacturing PMI in August slightly rebounded by 0.1 percentage points to 49.49%, indicating a marginal improvement in economic conditions. At this time of transition between traditional peak and off-peak seasons, the operating rate of downstream processing enterprises has rebounded, while the supply side faces factors such as concentrated maintenance of smelting plants and policy adjustments, which may lead to a month-on-month decline in output. The destocking of industrial metal social inventories is expected to accelerate, potentially catalyzing a rise in industrial metal prices