The rally on Wall Street took a breather, with three benchmark indices finishing slightly lower for the week. Despite some Fed officials’ reiteration of the rate hike path, equities showed resilient moves, suggesting that investors are waiting for more clues about the inflation trajectory and the Fed’s clarification of its monetary policy, which makes the FOMC meeting minutes for November in the spotlight for the week ahead.
On the other hand, while the global economic data all points to gloomier economic outlooks, the US and China’s recent meets seem to evolve some positive progress towards the two influential nations’ diplomacy, which improves broad investment sentiment. This could continue fuelling the recent rebound in Chinese shares.Click to enlarge the table
What are we watching?
- The bond yield inversion deepens: The yields spread of the US 10-year and 2-year Treasuries widened to the biggest since 1981, suggesting that the worsened economic outlook and Fed’s determination on rate hikes are leading to an unavoidable economic recession.
- Chinese stock markets’ outperformance: The Chinese stock markets’ outperformance became outstanding recently, with Hang Seng Index surging 21% month to date, amid the relaxing measures in its Covid curbs and further stimulus measures to its troublesome property sectors. The Chinese tech stocks’ rebound may have also suggested possible Beijing’s losing regulatory crackdowns on its tech sector.
- A sharp fall in copper and crude oil prices: Growth-sensitive commodities declined sharply last week, indicating that the demand outlook for resource metals and fuel is darkened amid worsened amid a gloomy global economic outlook, especially a slowdown in China’s growth.
- Crypto industry is on edge: The FTX’s fallout pulls off a regulatory alert to the Crypto industry and puts investors’ sentiment on edge after a few crypto exchanges paused withdrawals. Both Bitcoin and Ethereum are having around their two-year low levels of 16,600 and 1,200, respectively.