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Wall Street rallies as rates slip, RBNZ set for a jumbo rate hike

Bulls markets

US stocks rose amid a broad-based rally as deteriorated economic outlook and Fed’s possible slowdown in rate hikes continued to fuel the rebounding optimism ahead of the Black Friday shopping spree and Thanksgiving holiday. A few retailers’ positive earnings results and outlooks have also lifted sentiment. The US 10-year bond yield fell to 3.76% from 3.83% a day ago, while the US dollar weakened against the other G-10 currencies.

Traders will be awaiting the FOMC meeting minutes that due for release tomorrow when a softened tone in monetary policy is expected. In today’s Asian session, the RBNZ’s rate decision will be in the spotlight as the New Zealand central bank may raise its Official Cash Rate by unprecedented 75 basis points to combat a 32-year high inflation. This could continue to support the recent New Zealand dollar’s appreciation against the other major currencies.

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  • The S&P 500 climbed back to above the 4,000-mark amid the broad-based rally, with all 11 sectors finishing higher, in which Energy and Materials stocks led gains. Oil producers, such as occidental and Exxon Mobil rose 4.6% and 3%, respectively. The growth sectors, including Consumer Discretionary, Technology, and Communication Services, have also performed strongly, with all the Mega-cap tech giants up between 1-2%.
  • Best Buy surged 12% after the electronics retailer beat earnings expectations and raised its full-year forecast. The company’s third-quarter’s earnings per share came to $1.38, well above an estimated $1.03. Revenue is at $10.59 billion, also higher than an expected $10.31 billion.
  • UK’s GDP growth contracted by 0.4% between the fourth quarter of 2019 and the third quarter of 2022, lagging other G-7 nations, according to an OECD’s report. The report reflects the war induced energy crisis may start tipping some regions into an economic recession, typically in the UK and EU countries.
  • The WTI futures bounced back to above 81 after OPEC denied the news for an output increase of 500,000 bpd. However, China’s new wave of Covid outbreak and strengthened containment rules may continue weigh on oil prices in the near term.
  • Cryptocurrencies bounced from the recent lows as the FTX’s drama is in a chaotic process, while Biance CEO, Zhao, is reportedly to seek recovery funds from Middle East investors. Bitcoin and Ethereum rebounded from pivotal supports of 15,500 and 1,100, respectively.
  • The Chinese searching engine giant, Baidu, beat earnings expectations, with a surprise sales gain in the third quarter. Its revenue came to 32,5 billion yuan versus a 31.8 billion yuan estimated. The positive result follows Alibaba’s earnings beat last week, suggesting that the Chinese tech shares may have passed its toughest time during China’s covid-lockdowns and regulatory crackdowns earlier this year.
  • Asian equity markets are set to open higher. ASX futures were up 0.86%, Nikkei 225 futures rose 0.78% and Hang Seng Index futures climbed 0.34%.

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