China Times (www.chinatimes.net.cn) reporter Shuai Kecong Chen Feng Beijing report
In the early morning of October 5, Beijing time, US stocks closed sharply higher on Tuesday, with the Dow Jones Industrial Average rising more than 800 points, Nasdaq and S&P 500 index both rose by more than 3%. As the Federal Reserve's aggressive rate hike is expected to cool down, investor sentiment has improved, and the US stock market ushered in a phased rebound.
Twitter stock price soared by more than 22% in a single day, becoming a major focus of the market. Tesla CEO Elon Musk wrote a letter to Twitter, proposing to continue to acquire Twitter at the original planned $54.2 per share. It is reported that the transaction agreement is expected to be reached this Friday.
Chinese stocks listed in also rose strongly, Nasdaq China Golden Dragon Index closed up more than 5%, setting its best performance in more than a month. Alibaba and NetEase's stock prices rose by more than 4%, JD 's stock prices rose by more than 5%, and NIO 's stock prices rose by more than 8%.
html On the morning of October 5, financial commentator Guo Shiliang told the reporter of " China Times " that the expected cooling of the Fed interest rate hike, coupled with the sharp drop in the US dollar index , triggering a sharp rebound in US stocks. However, the market's concerns about a global recession still exist. After a short-term rebound, the future market still needs to look at the performance of future inflation rates and where the Federal Reserve's interest rate hikes will go.Dow Jones Industrial Average rose more than 1,500 points in two days
As of Tuesday's closing, the Dow Jones Industrial Average rose 825.43 points or 2.8%, to 30,316.32 points; the Nasdaq rose 3.34%, to 11,176.41 points; the S&P 500 rose 3.06%, to 3,790.93 points.
Among them, the Dow Jones Industrial Average hit the largest single-day gain since May 4, the Nasdaq index was the largest single-day gain since July 27, and the S&P 500 tied the largest increase since May 2020 set on June 24 this year.
This is the second consecutive trading day for the US stock market to rise sharply. The Dow Jones Industrial Average rose by more than 700 points on Monday, and the cumulative increase of more than 1,500 points in two days. As U.S. Treasury yields fell from a high of more than 10 years, U.S. stocks started strong in the fourth quarter and market sentiment improved. On Tuesday, the 10-year U.S. bond yield fell to around 3.6%, significantly lower than the level that exceeded 4% last week.
Some analysts believe that since the sentiment in the US stock market fell to freezing point at the end of September, it ushered in a phased rebound in the bear market. Whether the market can reverse still depends on the direction of the Federal Reserve's monetary policy. The Federal Reserve has raised interest rates by five times this year, and has raised interest rates by 75 basis points in the last three times. Now it has raised the target range of the federal funds rate to between 3% and 3.25%, which has had a huge impact on liquidity in the US stock market.
Amid the Fed's aggressive interest rate hikes, US stocks have suffered huge setbacks this year. Tonglian data shows that although it has rebounded sharply, as of the close of October 4, the Dow Jones Industrial Average still fell by more than 16% this year, the S&P 500 index fell by more than 20%, and the Nasdaq index fell by more than 28%.
Zheng Lei, chief economist of Samoyed Cloud Technology Group, said in an interview with a reporter from the China Times that interest rate hikes will lead to a decrease in the attractiveness of risky assets such as stocks to large investors, and funds will gradually flow out, and major asset reconfiguration will be carried out. The Fed is saving inflation in a recession.
CITIC Securities Chief economist Zhu Jianfang recently published an article saying that there may be three factors that may cause the Federal Reserve to turn this round of monetary policy. First of all, from a political perspective, the end of the US midterm election this year may be an important time to observe whether the Federal Reserve has policy changes. Secondly, from the employment level, the upward trend of unemployment rate exceeds 4.5% may be one of the possible factors that the Federal Reserve will stop hike interest rates. Finally, from the inflation perspective, the continuous decline in CPI month-on-month growth may be another possible factor in the Federal Reserve's stop hikes.
Musk's Twitter acquisition case reversed
In Tuesday's trading, the large-scale technology stocks in the US stock market generally rose, Apple stock price rose 2.56%, Microsoft stock price rose 3.38%, Google stock price rose 3%, Amazon stock price rose 4.5%, Meta stock price rose 1.2%, Tesla stock price rose 2.9%.
Thanks to Tesla CEO Elon Musk's confirmation that it will advance the acquisition, Twitter's stock price surged on Tuesday and became a major focus of the market.As of the close, Twitter's stock price rose 22.24%, reaching a new closing high since November 2021, with a latest market value of approximately US$39.8 billion.
On October 4th local time, some media quoted insiders as saying that Musk wrote a letter to Twitter, proposing to acquire the social media giant at his previously proposed offer of $54.2 per share. The news was subsequently confirmed in regulatory filings filed with SEC .
Twitter also issued a statement on Tuesday saying that the company received a letter from Musk and stated that "the company intends to complete the transaction at a price of $54.20 per share." Media reports said the deal could reach an agreement as early as Friday.
Review of Musk's acquisition of Twitter, this sky-high acquisition is incredibly dramatic. On April 14, 2022, a document released by the U.S. Securities and Exchange Commission officially made the acquisition worth $44 billion. Prior to that, Musk had been exposed to own more than 9% of Twitter shares. After the transaction plan was made public, the Twitter board seemed to be more resistant at one time, and even launched the "poison pill plan" to fight Musk's acquisition, but later the attitude gradually eased and turned into actively promoting the acquisition. Musk's attitude was full of twists and turns. Shortly after the transaction was made public, he said he wanted to withdraw and repeatedly criticized Twitter on the grounds of the number of false accounts, accusing the social media platform of fraud.
According to public reports, a US Delaware judge has previously announced that he will conduct a five-day trial on Twitter's acquisition case suing Musk on October 17. According to the agreement between the two parties, if Musk breaks the contract, he will need to pay $1 billion in compensation. There are many analysts from the outside world who believe that this high breakup fee may be one of the factors that Musk has to choose to continue to promote the acquisition.
Chinese stock index rose more than 5%
It is worth noting that with the strong rebound of US stocks market , Chinese stocks also rose sharply on Tuesday. The Nasdaq China Golden Dragon Index closed up 5.44% to 6567.54 points, which is the largest single-day increase of the index since August 25 this year.
Tonghuashun iFind data shows that only 60 Chinese stocks listed in the United States closed down, 88 stocks rose by more than 5%, and 27 stocks rose by more than 10%.
popular Chinese stocks generally rose, Alibaba's stock price closed up 4.55%, Pinduoduo's stock price rose 6.1%, JD's stock price rose 5.09%, NetEase's stock price rose 4.53%, Baidu 's stock price rose 3.2%, NIO's stock price rose 8.01%, Ideal Auto 's stock price rose 4.86%, Beike's stock price rose 5.14%, Bilibili's stock price rose 9.04%, and Futu Holdings rose 6.5%.
