US stocks jumped after the FOMC meeting minutes concluded that a slowdown in rate hikes may be on the table considering “uncertain lags” around monetary policy, though most participants see a higher ultimate rate than previously projected. This suggests that the Fed has reached the peak of hawkishness, even if not a pivot action.
The US dollar weakened further against the other G-10 currencies and the US bond yield slipped for the second straight trading day, pushing gold to jump back to above 1,750. However, the inflation and rates positive correlated commodity, crude oil’s prices slumped 4% on a gloomier global economic outlook amid China’s resurgence in the Covid cases.
At the economic front, the US November flash manufacturing PMI contracted for the first time since May 2022, flagging a significant economic downturn ahead, which also supported a potential Fed’s policy turnaround.Click to enlarge the table
- Nasdaq climbed above key resistance level of 11,700 as tech shares outperformed amid Fed’s confirmation of slower pace on rate hikes. 10 out of 11 sectors in the S&P 500 finished higher, with growth stocks leading gains as all the mega-cap tech companies closed in green. The energy sector is the only one that finished lower due to a slump in oil prices, down 1.2%.
- Tesla shares jumped 7% after Citi upgraded the EV maker’s stocks to neutral from “Sell” and increased the price target to $176 from $141.33. Tesla’s shares fell about 45% from its September high on slow EV demands and CEO Elon’s takeover of twitter. Some analysts see the recent Inflation Reduction Act will benefit the EV sector. Other EV stocks, including NIO, Xpeng, and Rivian, all rose between 3-6%.
- Manchester United shares surged 23% after a 20% jump on Wednesday as the owners said they were seeking for a potential sale of the club after Cristiano Ronaldo’s contract was terminated.
- Crude oil tumbled 4% amid a darkened economic outlook, with China’s Covid resurgence weakening the demand outlook, despite a larger-than-expected draw in the US oil inventory. The WTI futures price fell back below 80 again, heading off the recent pivotal support of 75.
- Cryptocurrencies bounced for the second day as risk sentiment somewhat recovered from the FTX chaos. The bankrupted firm is allowed to hide identity of its 50 biggest creditors according to a judge at the first court hearing. Bitcoin and Ethereum both stabilized above their recent lows, up 2.7% and 4.3%, to above 16,500 and 1,170 in the last 24 hours, respectively.
- China ruled out more stimulus measures to support its property sector, signalling to further cut reserve requirement, with an expectation to lower its RRR by 25-50 basis points as early as this Friday, which will be the second time after a cut in April this year. This may further boost Chinese shares, despite the recent Covid resurgence.
- Asian equity markets are set to open higher. ASX futures were slightly up 0.07%, Nikkei 225 futures rose 0.82% and Hang Seng Index futures climbed 0.48%.