China Times (www.chinatimes.net.cn) reporter Shuai Kecong Chen Feng Beijing report
In the early morning of October 22, Beijing time, US stocks opened low and closed high on Friday. The three major indexes closed up more than 2%, and the Dow Jones rose by more than 700 points. Market sentiment has been boosted after media reports that the Federal Reserve may slow down the rate hike of by the end of .
Chinese stocks listed in the United States overall performance is not as good as US stocks market , and Nasdaq China Golden Dragon Index closed up only 1.13%. Alibaba slightly rose 0.22%, JD slightly fell 0.02%, Pinduoduo rose more than 5%, NIO , Ideal, and Xiaopeng Motors collectively rose more than 2%. The stock price of Youxian soared by 57%, with a full-day turnover rate of 49%.
html In the early morning of October 22, IPG China chief economist Bai Wenxi told the reporter of " China Times " that after the previous few rounds of sharp interest rate hikes, US stocks fell significantly. If inflation eased, the Federal Reserve may slow down interest rate hikes in December or reduce the intensity of interest rate hikes. It is expected that the US stock market will fluctuate based on the rebound in the future, depending on the strength and frequency of the Federal Reserve's interest rate hikes.But some analysts firmly believe that the Fed's fight against inflation is far from over, and the Fed needs a firmer and faster rate hike. The possibility of a 75 basis point rate hike in December is not low.
US stocks hit the best week since June
Local time on October 21, local time, the Wall Street Journal reported that Federal Reserve officials were moving towards the goal of raising interest rates by 75 basis points again at the meeting from November 1 to 2, and at that time they may discuss whether and how to issue plans to approve a small rate hike in December.
A possible solution is that Fed officials approved a 50 basis point rate hike in December while forecasting to raise interest rates slightly higher in 2023 than last month’s forecast. After the
report was released, the dollar index fell in the short term, the US bond yield fell at a high level, and the futures rose rapidly. The 10-year U.S. Treasury yield, known as the "anchor of the global asset pricing ", rose to above 4.3% on Friday, hitting a new high since 2007, but has now fallen back to around 4.2%.
The three major U.S. stock indexes opened low and closed high on Friday. As of the close, the Dow Jones Industrial Average rose 748.97 points or 2.47% to 31,082.56 points; the Nasdaq rose 2.31% to 10,859.72 points; and the S&P 500 rose 2.37% to 3,752.75 points.
11 sectors of the S&P 500 index rose across the board, with the raw materials sector rising by 3.46%, while the finance, optional consumption, energy, information technology, industry, health care sectors, etc. rose by more than 2%.
Over the past week, the Dow Jones Industrial Average rose 4.89%, the S&P 500 index rose 4.74%, and the Nasdaq rose 5.22%. All three major indexes have recorded their biggest weekly gains since June.
Chinese stocks lagged behind the market
In the trading of US stocks on Friday, most of the US technology giants rose, Apple stock price rose 2.71%, Microsoft stock price rose 2.53%, Google stock price rose 0.94%, Amazon stock price rose 3.53%, Tesla stock price rose 3.45%, but Meta stock price closed down 1.16%.
American social software company Snap shares closed down 28.08% at $7.76 per share, with its market value shrinking to about $12.8 billion. The company's previous third-quarter financial report was lower than expected, with revenue of US$1.13 billion during the reporting period, lower than the market's expectations of US$1.14 billion. The year-on-year revenue growth rate was only 5.7%, the first time since its listing in 2017 was reduced to single digits. After the financial report was released, JPMorgan Chase and other Wall Street financial institutions have lowered their target prices.
Most Chinese stocks listed in the US rose, but their overall performance lags behind the US stock market. The Nasdaq China Golden Dragon Index, which measures the performance of Chinese stocks, closed up 1.13% to 5221.93 points. The index has fallen by 1.8% over the past week and is the sixth consecutive week of decline. Among the popular Chinese stocks listed in
, Alibaba's stock price closed up 0.22%, Pinduoduo 's stock price rose 5.51%, JD.com fell slightly 0.02%, NIO rose 2.19%, Ideal Auto rose 2.72%, Xiaopeng Motors rose 2.39%, BeiGene rose 5.61%, Ctrip rose 2.92%, Beike rose 0.95%, Futu Holdings rose 2.52%, Bilibili fell 0.18%, 360 Digital Technology fell 1.26%, iQiyi fell 1.93%, and Wuxin Technology rose 1%.
It is worth mentioning that the stock price of Youxian closed up 57.5% at US$2.52 per share, with a market value of approximately US$19.78 million, and its full-day turnover rate reached 49%. This "dying" fresh food e-commerce platform unexpectedly welcomed capital takeover or speculation in the capital market after its unsustainable financing and a massive shrinking of business.
Will the Fed slow down interest rate hikes?
Although U.S. stocks have just achieved their best performance in nearly four months, will the Fed really slow down its rate hike? The answer may not be too optimistic.
As US inflation continues to remain high, since the Federal Reserve launched the interest rate hike cycle in March this year, it has raised the target range of the federal funds rate between 3.00% and 3.25% through five interest rate hikes. The last three times have been raising interest rates by 75 basis points, which has set the largest intensive interest rate hike since 1981.
But this struggle against inflation is far from dawn. The latest inflation data released last week showed that after excluding the volatile food and energy prices, the US core CPI rose 6.6% year-on-year in September, not only higher than the market expectations of 6.5% and 6.3% of the previous value, but also hit a new high since August 1982.
Dovish Fed official and San Francisco Fed Chairman Daley publicly stated on Friday that she hopes to see a slowdown in rate hikes, but this requires seeing a significant drop in inflation levels, but the current data does not support it.
Analysts such as Liu Zhengning and Zhang Wenlang of CICC pointed out in a report released this week that although the Federal Reserve has raised interest rates several times in a row, the US CPI data is still strong, and inflation expectations rebounded again, sending a "unfriendly" signal. The Fed may need to raise interest rates more firmly and faster in the short term, and the highs of interest rate hikes may also rise as a result, and it is expected to be close to 5%.
"We think this may be the 'last effort' of the Fed to fight inflation. This also means that the pace of the Fed's interest rate hike in the fourth quarter may not slow down, and the possibility of a 75 basis point rate hike in December is not low," the report said.
Under the threat of the Federal Reserve's continued interest rate hikes, the U.S. stock market has become one of the worst-performing stock markets in the world this year. Tonglian data shows that as of the close of October 21, although the US stock market rebounded sharply this week, the Dow Jones Industrial Average still fell more than 14% this year, the S&P 500 still fell more than 21%, and the Nasdaq still fell more than 30%.
The next Fed interest rate agenda meeting will be held from November 1 to 2. At 8:00 on October 22, Beijing time, the Federal Reserve Observation Tool of CME Group showed that the current market expects the probability of the Fed raising interest rates by 75 basis points in November reaching 88%. It is also expected that the probability of raising interest rates by 75 basis points again in December has fallen sharply from 74% two days ago, but it still exceeds 50%.
The market expects that the Fed's rate hike by 75 basis points in November will be 88%
