24 Nov 2022

Last night, the three major U.S. stock indexes fluctuated and closed up. Many Fed officials supported slowing down the pace of interest rate hikes. The three major stock indexes maintained their gains in late trading, and most popular Chinese concept stocks closed higher. As of the close, the Dow rose 0.28%, its highest level since April 21, the Nasdaq rose 0.99%, and the S&P rose 0.59%. The yield on the 10-year U.S. Treasury bond fell 1.676% to close at 3.695%, a difference of -79 basis points compared to the yield on the two-year Treasury bond. The panic index VIX fell 4.27%. Brent crude oil closed down 3.69%. Spot gold closed up 0.59% at $1,750.27 an ounce. The U.S. dollar index remained high, closing at 106.11.

The European Union is considering imposing a price cap of $65-70 a barrel on Russian oil. It is reported that Germany plans to levy a windfall profit tax of 33% on natural gas, coal and oil companies, while German Finance Minister Lindner said that there will be no tax increase. According to the Russian oil transportation company: the "Friendship" pipeline has suspended transportation in Ukraine, but oil transportation from Belarus to Ukraine continues. Russian Prime Minister Mishustin said that Russia's GDP contraction rate in 2022 may be less than 3%. The change in EIA natural gas inventories in the United States for the week to November 18 recorded -80 billion cubic feet, ending the growth trend since the week of April 1, 2022, and the largest drop since the week of March 4, 2022.

The number of people applying for unemployment benefits in the United States in the week ended November 19 recorded 240,000, a three-month high, and the job market cooled. The number of people continuing to receive unemployment benefits increased by 48,000 to 1.55 million in the week ended November 12, the highest since March. Continuing claims include those who have been on unemployment benefits for a week or more. Economists have been watching continuing jobless claims closely in recent weeks because the data have been an early warning indicator of recession in the past. While the index has recovered from its lows in May this year, it remains well below last year's levels and historical averages.

The initial value of the Markit manufacturing PMI in the United States in November recorded 47.6, a new low in 30 months, and the expected value was 50, and the previous value was 50.4. Business conditions across the United States deteriorated in November. Output and demand fell at a faster pace, consistent with a 1% annual contraction in the economy, according to preliminary PMI findings. Businesses reported growing headwinds from rising costs of living, tighter financial conditions, especially higher borrowing costs, and weaker demand in domestic and export markets. Less pressure on supply chains is partly a symptom of falling demand, but hiring has been slow everywhere so far in the fourth quarter as companies focus on cutting costs. In this environment, while inflationary pressures should likely continue to cool in the coming months, at the same time, the possibility remains that the U.S. economy could slip further into recession.

European Central Bank Governing Council Vasle said that the current rate of interest rate hikes is sufficient and will continue to raise interest rates in December, and the ECB will continue to raise interest rates in 2023. The European Central Bank's management committee, Centeno, said that 75 basis points of interest rate hikes are unlikely to become the norm, and the rate of interest rate hikes in December is expected to be lower; inflation may peak in this quarter, which is a key indicator to watch at the December meeting .

According to the minutes of the Federal Reserve meeting: as monetary policy approaches a sufficiently restrictive level, most Fed officials support a slowdown in the pace of interest rate hikes. Given the uncertain lags in monetary policy, a slower pace of rate increases would allow the Committee to better assess progress towards its goals of maximum employment and price stability. Some participants commented that a slower pace of rate hikes would reduce the risk of financial system instability. Some other participants noted that it would be better to wait until the policy stance is more clearly in restrictive territory and there are more concrete signs that inflationary pressures are subsiding sharply before slowing the pace of policy rate hikes. But participants agreed that inflationary pressures showed little sign of easing.

"Fed megaphone" Nick Timiraos said that it is difficult to judge whether the committee is convinced of Powell's hawkish speech on higher terminal interest rates at the last interest rate conference from the minutes of the meeting alone, but there is no clear objection to this view. After the release of the Fed meeting minutes, interest rate futures showed that the market slightly increased the probability of a 50 basis point rate hike at the December meeting to 79%.

Apple rose 0.59%. According to Wedbush: iPhone 14 supply is seriously in short supply, and Apple's Black Friday weekend sales may drop to about 8 million units.

Microsoft rose 1.04%. Microsoft China, Accenture, and Avanade deepened cooperation to comprehensively improve Microsoft's cloud service delivery capabilities and accelerate the process of enterprises going to the cloud.

Google rose 1.53%. Shareholders demanded to scale back and increase buybacks. Google plans to lay off 10,000 employees.

Amazon rose by 1%, Amazon announced price increases for many fees, and seller profits were further compressed.

Tesla rose 7.82%, the biggest one-day gain since July, as Musk said he would expand cooperation with South Korea in the supply chain and purchase components worth $10 billion by 2023.

Meta rose 0.72%, and will provide VR headsets without Facebook accounts in Germany.

Disney rose 2.78%. The movie "Avatar: The Way of Water" is scheduled to be released in mainland China on December 16.

Credit Suisse fell 6.36%. It is expected that the pre-tax loss of Q4 will be as high as 1.5 billion Swiss francs. The company is preparing to raise new equity after seeking shareholder approval.

HP rose by 1.8%. In fiscal year 2022, Q4 revenue decreased by 11.2% year-on-year, and it turned from profit to loss year-on-year; it is expected to lay off 4,000-6,000 employees by the end of fiscal year 2025.

Sources from: Investing.com; Reuters.com

Louis Yap

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