Every Business Editor: Du Yu
On October 13, Eastern Time, U.S. stocks opened low and closed high, and all three major indexes rose by more than 2%. Dow Jones rose 827.87 points , rose 2.83% to 30038.72 points; S&P 500 index rose 2.6%, and Nasdaq rose 2.23%. The Dow Jones Industrial Average fluctuated more than 1,500 points during the session, and the S&P 500 and Nasdaq ended their daily line for six consecutive declines.
Large technology stocks most of them rose , Netflix rose more than 5%, Apple , Microsoft rose more than 3%, Facebook rose more than 2%, and Google rose more than 1%. bank stocks collectively rose , Bank of America rose more than 6%, JPMorgan Chase , Citi rose more than 5%, Goldman Sachs and Wells Fargo rose more than 4%, Morgan Stanley rose more than 3%.
Popular Chinese stocks rise and fall , Daily Youxian rose by more than 14%, Zhihu rose by more than 2%, Luckin Coffee , Weibo , iQiyi rose by more than 1%, Tencent Music and Vipshop rose slightly. Bilibili fell nearly 5%, Xiaopeng Motors fell more than 4%, Manbang fell 3%, JD and Futu Holdings fell more than 2%, Ideal Auto, Pinduoduo, NetEase fell more than 1%, Alibaba , NIO , Baidu , Baidu fell slightly.
U.S. inflation has exploded again, US stocks opened low
On Thursday evening, Beijing time, the U.S. Department of Labor released the latest inflation data that has attracted much attention from the market.
On October 13, U.S. Bureau of Labor Statistics released data showing that the US CPI in September rose 8.2% year-on-year, higher than the market's expectations of 8.1%, and the previous value of 8.3%;
9 September's CPI rose 0.4% month-on-month, twice the market's expectations of 0.2%, and significantly higher than the previous value of 0.1%.
is below its peak of 9% in June, but remains at its highest level since the early 1980s.
After the US September CPI data was released, interest rate futures data showed that the current market expects that the probability of FOMC hiking interest rates by 75 basis points in November is close to 100%. The probability of aggressive rate hikes of 100 basis points is 7%; the market seems to have completely ruled out the possibility of raising interest rates by 50 basis points.
According to China Fund News, analysts said that the September inflation data, including core CPI inflation, was unexpectedly high, strengthening the expectation of Fed to raise interest rates by 75 basis points at its November meeting. swap market predicts that the Fed will raise interest rates by at least 75 basis points in November, and the probability of 100 basis points is about 10%.
market expects that by March 2023, the federal funds rate will peak at 4.85%. U.S. short-term interest rate traders expect that the possibility of the Federal Reserve's policy interest rate reaching the range of 4.75%-5% in March 2023 is becoming increasingly high. After the
data came out, before the US stock market and during the European market, all of them dived into .
US stocks "stood" a big reversal
After the "explosive" inflation data was implemented, US stocks then staged a big reversal. Dow Jones Index rose by more than 1,100 points from the lowest point at the beginning of the session, and rose by more than 2%. As of the close of October 13, Eastern Time, the Dow Jones Industrial Average rose 2.83%, the S&P 500 rose 2.6%, and the Nasdaq rose 2.23%. The Dow Jones fluctuated more than 1,500 points during the session.
At the same time, the European stock market also reversed the market at the end of the trading day. As of the closing of the day, the European Stoke 50 index turned from a decline of nearly 2% to a rise of 0.93%, the French CAC40 index rose more than 1%, the German DAX index rose 1.5%, the FTSE 100 index in the UK rose 0.35%, and the FTSE MIB index in Italy rose 1.56%.
FTSE China A50 Index CFD also rose back.
USD index surged and fell.
Why did the US stock market "stage" a big reversal?
According to brokerage China, the main reason for the big reversal in the European and American markets after the "explosive" inflation data was implemented, perhaps the main reason for the big reversal in the European and American markets was that the market has always been worried about the risk boot of the Federal Reserve's interest rate hike. After the data was released, swap contracts linked to the date of the Fed's meeting fully digested the 75 basis points interest rate hike in November, while the US stock market continued to weaken before, and the Fed's 75 basis points interest rate hike has been fully priced.
In addition, US Commerce Secretary Raymondo also made the latest statement that as inflation data continues to rise, the Biden administration will consider some targeted tariff reduction and exemption policies.
Specifically, the US CPI data in September, food and rental prices are still rising significantly, and owners' equivalent rents rose by 0.8% month-on-month in September, the largest single-month increase since June 1990. Housing inflation was 6.59%, up from 6.24% last month, a record high. Rents rose 7.21% year-on-year, up from 6.74% last month, the highest level on record.
However, on the eve of the disclosure of this highly-watched inflation data, JPMorgan Chase's trading department issued a warning that once the CPI data was higher than 8.3% in August, it will have a severe impact on US stocks. At that time, after the CPI data in August was released beyond expectations, the S&P 500 fell by 4.3%. Will the storm of interest rate hike continue? After the data of
was released, the financial market fluctuated violently. The yields of US dollar and US bonds rose rapidly, while crude oil, gold, non-US currencies, etc. fell significantly. Among them, the "anchor of global asset pricing" - the 10-year U.S. Treasury yield once exceeded 4%.
Since this year, the Federal Reserve has raised interest rates by 75 basis points three times in June, July and September. At present, the Federal Reserve has raised the target range of federal funds rate to 3% to 3.25%.
According to Cailianshe, market analysis said that potential inflation pressure in the United States continued to rise in September, strengthening the Fed's expectation that the Fed will raise interest rates by 75 basis points for the fourth time next month. CME’s “Federal Watch” tool shows that the market has fully digested the bank’s expectation of a 75 basis point rate hike in November, and there is even a 7.6% chance of raising interest rates by 100 basis points.
Some analysts pointed out that no matter whether the CPI data strengthens or weakens in September, the next interest rate meeting of the Federal Reserve may not change the action of raising interest rates by 75 points. Ruisui's latest report also pointed out that the core U.S. inflation rate will not change the Fed's expectation of a 75 basis point rate hike in November.
Federal Director Waller, who has FOMC voting rights, also said that the released economic data will not significantly change his and Fed officials' views on the extent of interest rate hikes in November.
In addition, on October 12 local time, the latest minutes of the Federal Reserve's September meeting released showed that Fed officials were surprised by the rate of inflation and expected the pace of interest rate hikes to stop. Federal Reserve officials at the meeting agreed that as of now, there is still no sign of easing in the U.S. inflation , and high inflation has caused harm to low-income people in the U.S., and the federal funds rate should continue to be raised.
According to Securities Times , compared with the hawkish speeches of many Fed officials, the views of the Fed Vice Chairman Lael Brainard are relatively moderate. In her speech on price stability on October 10, she said that the current slowdown in output exceeded expectations, indicating that the slowdown in demand caused by the tightening of monetary policy is having a partial impact. But labor demand remains strong, and this supply and demand imbalance is mainly reflected in strong wage growth. In the superimposed high rental and housing costs, this means that the core service industry inflation is only expected to ease slowly from current high levels.
When implementing the policy, the Federal Reserve considered the rising interest rates, the strengthening of the US dollar, the weakening demand for the United States by foreign economies, and the spillover effect in the opposite direction.
Brenard expects inflation to fall further in the next few quarters. Monetary policy will take restrictive measures for a period of time to ensure a clear and meaningful decline in inflation. The full impact of tightening policies will not be felt in the coming months. Policy interest rates will be further increased, and the actual policy path will depend on the data.
When Fed officials are well-known, Brainard's speech can only be said to be in line with the rules. There is no feeling that the Fed's determination to fight inflation is weakening, nor does it feel that the Fed will not continue to raise interest rates as planned.
Daily Economic News Comprehensive Brokerage China, Securities Times, Cailianshe, China Fund News
Daily Economic News
