Introduction
Good morning, investment friends! Welcome to the Morning Finance Quick Interpretation. It's 8:31 am on Wednesday, June 25, 2025, Taipei time. I'm You Tinghao. Every morning, half an hour before the market opens, we're here to accompany you and interpret international financial news and current affairs changes together.
Israel - Iran Situation
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Cease - fire and Ongoing Tensions: Although Israel and Iran have reached a temporary cease - fire, according to Trump's remarks, there still seem to be some sporadic battles continuing. After the US intervention, if the oil price has not risen, it's possible that Trump might just let them fight.
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Trump's Involvement: Trump announced that Iran and Israel had reached a cease - fire agreement, and it was in effect on social media. However, the two sides were still exchanging fire, indicating that the war had not completely cooled down. Trump coordinated the cease - fire with Israeli Prime Minister Netanyahu, while Vice President Pence and Rubio had direct contact with Iran.
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Trump's Discontent: Trump expressed significant dissatisfaction with both Israel and Iran. He said that Iran violated the agreement, and Israel also had违规行为. He particularly criticized Israel for conducting large-scale bombings immediately after the agreement was reached, far beyond expectations.
US Stock Market and Oil Price
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US Stock Market Performance: The US stock market continued to rise on Tuesday. The Dow Jones Industrial Average rose 507 points, the S&P 500 Index rose 1.11% and approached a 52-week high, the Nasdaq Composite Index rose 1.43%, and the Nasdaq 100 Index reached a closing high. The Philadelphia Semiconductor Index (SOX) rose 3.7%. TSMC ADR rose 4.7% to $220, about 23% higher than the Taipei price. NVIDIA rose 2.6%, and Broadcom rose 3.9% and reached a record high.
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Oil Price Drop: International oil prices fell significantly. The New York West Texas Intermediate (WTI) crude oil price plunged 6%, and airline stocks rebounded. The drop in commodity assets may imply that Trump will no longer intervene in the sporadic battles between Israel and Iran.
Federal Reserve and Interest Rate Cut Expectations
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Fed Chair Powell's Stance: Federal Reserve Chair Powell did not rule out the possibility of a rate cut in July during yesterday's hearing. The US stock market's rise was also related to the expectation of a rate cut.
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Inflation Data and Rate Cut Possibility: The inflation data in July is crucial. If the new tariff agreement or new measures in July do not cause a further increase in the monthly CPI growth rate, there is a chance of an early rate cut in July. Some Fed officials, such as Waller and Bowman, support a rate cut in July.
Copper - Oil Ratio and Inflation
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Copper - Oil Ratio Trend: The copper - oil ratio is an important indicator to observe inflation. Currently, the copper - oil ratio is returning to the upward track, indicating that inflation is shifting from a supply problem to a tariff and economic expansion problem. This is one of the reasons why the Fed is reluctant to cut interest rates significantly.
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Real Estate Market and Fed's Consideration: Although the US real estate market is performing poorly, with a significant slowdown in house price growth and a decline in sales volume, Fed Chair Powell believes that it has not caused systemic risks, and the Fed should still focus on inflation.
Fed's Response to Tariff Policy
- Powell's Position: During the hearing, many members of Congress asked whether Powell supported Trump's tariff policy. Powell tried to avoid this issue, stating that the Fed's responsibility does not include commenting on the president's tariff policy. The Fed is only responsible for price stability and full employment.
Enhanced Supplementary Leverage Ratio (eSLR)
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Impact on the Bond Market: If the eSLR is adjusted and relaxed, it will be very beneficial for the US Treasury bond market. It will increase the banks' willingness to buy Treasury bonds, improve the liquidity of the bond market, and reduce the cost of borrowing for the government.
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Potential Risks: However, the relaxation of the eSLR will also increase the overall systemic risk. The Fed still needs to discuss this issue with the FDIC and the Office of the Comptroller of the Currency.
US Stock Market Performance
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Major Index Movements: The Dow Jones Industrial Average rose 507 points, or 1.19%, to close at 43,089 points; the S&P 500 Index rose 67 points, or 1.1%, to close at 6,092 points; the Nasdaq Composite Index rose 281 points, or 1.43%, to close at 19,912 points; the Philadelphia Semiconductor Index (SOX) rose 197 points, or 3.77%, to close at 5,441 points.
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Investment Strategy: Long-term investment in the stock market should be based on the productivity cycle. It is important to distinguish between stocks with productivity attributes and those without. Diversifying risks and participating in the long-term growth of the stock market is a direction for investors to consider.
Taipei Stock Market
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Market Performance: The Taipei stock market rose 172 points to close at 22,361 points. Although the Taipei stock market has lagged behind the US stock market, with the return of market optimism, it is expected to attract new buying.
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Foreign Investment: Foreign investors have sold a large amount of stocks in Taiwan this year. Although they have replenished some in May, the overall selling pressure is still relatively large.
Future Outlook
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Investment Strategy: As the market optimism gradually returns, cyclical investors should observe the changes in the cycle and whether there is a risk of inventory adjustment pressure.
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Listener Meeting: Next Saturday is the second-quarter listener meeting of "Finance Hao Jiao". At that time, we will conduct a more in-depth analysis of the market trend.
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Conclusion: Today's program ends here. If you like our program, remember to subscribe, like, and share. We'll meet again at 8:30 am tomorrow morning for the Morning Finance Quick Interpretation. I wish all investment friends a smooth market-watching and happy trading.
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