US stocks bounced off session lows and finished higher ahead of the Fed meeting later this week. While the US 10-year bond yield finishes at a 10-year high, the yield on the 2-year notes hits a fresh 15-year high, pointing to another heavy rate hike ahead. Fed is expected to raise the interest rate by 75 basis points at least on Thursday. Despite a jump in bond yields, the US dollar stayed flat, with the dollar index slightly down 0.14%, to 109.61.
- Dow was up 0.64%, the S&P 500 rose 0.69%, and Nasdaq advanced 0.76%. 9 out of the 11 sectors in the S&P 500 closed higher, with materials and consumer discretionary leading gains, while healthcare and real estate stocks were lower. Most mega-cap tech shares finished higher. Apple rose 2.72%, Meta Platforms was up 1.18%, and Tesla Motors climbed 1.95%. Ford’s shares dropped 5% in after-hours trading as the carmaker warned of an extra $1 billion in supply chain costs in the third quarter.
- China steps up cash injection by cutting its 14-day repo rate from 2.25% to 2.15%, injecting 12 billion yuan through both 7-day reverse repos and the 14-day tenor. The PBOC’s decision on its 1-year and 5-year loan prime rates will be on close watch today, but the bank may keep rates unchanged to stabilize the Yuan. China’s central bank faces the dilemma to boost a weak Yuan and a sluggish economy. USD/CNH closed just above 7 after hitting a day high of 7.0257. A breakout of the recent high of 7.04 may take the pair to hit 7.20, the highest level seen in May 2020.
- Most regional markets across Asia are set to open higher following the positive close on Wall Street and a rate cut in China. ASX futures were up 0.82%. Nikkei225 futures were flat and Hang Seng Index futures rose 0.64%. The RBA policy meeting minutes are to release at 11:30 am AEST today, when the reserve bank is likely to highlight concerns about economic growth, with a less hawkish stance in its monetary policy.
- Most major currencies reversed early losses against the US dollar as traders are awaiting clues from the Fed. EUR/USD rose for the fourth trading day, to just above the parity level, while USD/JPY was up slightly to 143.23 this morning. Commodity currencies, including AUD, CAD, and NZD all consolidated above the recent lows.
- Both gold and oil prices also bounced off day lows, finishing flat due to a pullback of the US dollar. As for crude markets, the Fed meeting may be overshadowing supply concerns, with the dollar’s movement becoming the main driver of oil prices.
- Bitcoin bounced off a fresh-two-year low. The largest market-cap token was flat at above 19,500 this morning after hitting a fresh 2-year low of under 18,300 on Monday, which makes the day-low of 18,232 a pivotal support.
Disclaimer: CMC Markets is an order execution-only service. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.