The market is confident in China’s economic recovery, and is also looking to the later December meeting minutes of the US Federal Reserve (Fed) for clues about future monetary policy developments. the indices opened higher on Wednesday (4).
before the deadline,Dow Jones Industrial Averagerose more than 180 points or nearly 0.6%,Nasdaq Composite Indexrose by more than 70 points or nearly 0.7%,S&P 500 index+0.7%,Semiconductor PhiladelphiaThe index is up more than 3%.
As the Chinese government considers further support for property developers, European data showed French inflation unexpectedly slowed, showing thatEURPrice pressures in the region eased and major index futures rose before the US equity market opened.
At 3 a.m. Thursday (5th), Taiwan time, the Fed will announce the minutes of its December monetary policy meeting. According to market estimates, the minutes of the December meeting will explain why the Fed simultaneously raised its inflation and unemployment rate expectations from 2023 to 2025 and how much the warm labor market will affect inflation.
Wall Street analysts believe there are three main points to look out for in these meeting minutes: an explanation for the rising inflation forecast, how high the unemployment rate can be tolerated, and when they will be satisfied with the performance. of inflation.
The central message delivered by the latest economic forecasts is that, due to the growth of wages and prices of services which remain high, the personal consumer price index (PCE) will also rise accordingly, thus inflation expectations have increased. But Wall Street analysts think the Fed’s forecast is too high.
Turning to the job market, Mark Spindel, chief investment officer at investment bank MBB Capital Partners LLC, said he will look for clues in the meeting minutes that the Fed has increased its tolerance for the unemployment rate, which is expected to rise be higher than its forecast for this year’s unemployment rate of 4.6%, or a full percentage point higher than the current unemployment rate.
In terms of inflation performance, the market believes that if the unemployment rate rises rapidly according to the wishes of the Fed, the US economy will not be able to avoid a hard landing. According to Bloomberg Economics, the Fed minutes may suggest that it was fears that the job market wasn’t cooling fast enough that prompted the 17-member Federal Open Market Committee (FOMC) to cut the final rate hike in the latest dot plot. more than 5%.
Former Fed chairman Alan Greenspan said a US recession is the “most likely outcome” as the central bank tightens monetary policy to curb inflation. He stressed that wage and job growth still need to slow further so that the decline in inflation is not temporary. There may be a brief pause in the US on the inflation front, but Greenspan thinks “it’s too late.”
In addition to the latest Fed meeting minutes, investors are also waiting for November US JOLT jobs data to be released later Wednesday, the ISM manufacturing index for December and the nonfarm payrolls report to be released. Friday (6) .
Among individual stocks, U.S.-listed Chinese tech shares jumped in pre-market on Wednesday after the Beijing government approved Ant Group’s plans to expand its capital. Alibaba (BABA-US) American Depositary Receipt (ADR) shares rose more than 6% in premarket trading, JD.com (JD-USA) also. In addition, Baidu (BIDU-US) and Netease (NTES-USA) shares rose more than 5%, while Ctrip (TCOM-USA) increased by 4.5%.
Starting at 22:00 on Wednesday (4th) Taipei time:
Focus on actions:
strange company (GE-USA) rose 2.02 percent to $67.64 a share in early trading
GE HealthCare Technologies, a spinoff of General Electric, began trading as a separate company on Wednesday.S&P 500 indexclimb. GE revealed plans last year to spin off the three companies so they can focus on aviation. The company plans to spin off its energy unit in 2024. Before the deadline, GE shares were up 0.66% ahead of market.
DMS (MRK-USA) rose 1.15% to $112.30 a share in early trading
Merck was up about 1.7% ahead of the market after Bank of America upgraded its rating on Merck to “buy” from “neutral.” Analysts highlighted continued revenue growth for Merck and significant progress in strengthening the position of its cancer drug Keytruda and mitigating the impact of patent expirations.
Microsoft (MSFT-USA) fell 3.66% to $230.81 per share in early trading
Shares of Microsoft fell about 2% in pre-market trading after UBS downgraded the tech giant’s shares to ‘neutral’ from ‘buy’. UBS said investors were concerned about Microsoft’s Azure and Office businesses after a series of on-site inspections.
Today’s key economic data:
- US ISM Manufacturing Index expected to be 48.5 in December, previous value was 49
- JOLT job vacancies in the US expected to be 10.334 million versus 9.9 million previously
Wall Street Analysis:
In an interview, Vasu Menon, executive director of investment strategy at OCBC Bank Wealth Management, said that if the economy is just a mild recession rather than a severe recession, the market could have a good rebound in the second half of the year. year. There’s a lot of cash on the sidelines, waiting to come back into play with those macro cues.
Dan Niles, founder of hedge fund Satori Fund, said a few days ago that while companies and investors continue to feel the pressure brought by the Fed’s measures to curb inflation,S&P 500 indexit would be down 20% from current levels. The Satori Fund willS&P 500 indexThe goal is set at 3,000 points. Investors will see downward revisions to corporate earnings this year as economic growth begins to slow after the Fed sharply raised interest rates last year, Niles said.
