On Thursday (October 26th), the NASDAQ 100 index fell to its lowest point since May, and technology giants appeared to be on the verge of rebounding from the sell-off, with Amazon and Intel rising after posting robust financial reports after hours.
The $192 billion exchange traded fund (QQ) tracking the Nasdaq 100 index rose in late trading after falling nearly 2% on Thursday. The sell-off also put the S&P 500 index on the brink of a "correction", which has fallen nearly 10% from its peak in July and hit a nearly five month low on Thursday. Ford Motor Company fell after the close due to disappointing data. Although the economic growth was steady, traders bet that the Federal Reserve would suspend its action, but economic data showed that inflation pressure continued to dissipate, and the yield of US treasury bond bonds fell.
Geir Lode, Global Equities Director at Federated Hermes, said, "There are still many shortcomings in the financial reporting season, as typical economic sensitive stocks that perform well in difficult circumstances are starting to collapse under pressure. Good performance is no longer enough to make these economic sensitive stocks attractive, as investors are concerned about a weak macroeconomic background
The two-year yield, which is more sensitive to the upcoming actions of the Federal Reserve, fell 8 basis points to 5.04%. The swap contract predicts a 32% chance that the Federal Reserve will raise interest rates again during the current tightening cycle.
US Treasury Secretary Yellen stated that the surge in long-term bond yields in recent months reflects the strong economy and expectations that interest rates may have to remain high for a longer period of time.
According to a survey conducted by 22V Research, 71% of the interviewed investors believe that the yield of 10-year treasury bond bonds (recently hit 5%) has not yet peaked. They expect this number to continue to grow, with a peak expected median of 5.5%. 19% of people believe that the peak yield reaches or exceeds 6%.
Edward Moya, senior market analyst for the Americas at Oanda, said: "Before bond yields plummet, the stock market is not yet ready to rebound, and this may not happen until we see inflation significantly approaching the Fed's target.
In terms of economic data, due to a surge in consumer spending, the US economy grew at its fastest pace in nearly two years in the previous quarter. From July to September, the annualized growth rate of US GDP was 4.9%, while economists surveyed by Dow Jones predicted it to be 4.7%.
Lindsay Rosner, head of multi departmental fixed income investments at Goldman Sachs Asset Management, said: "For the November Federal Reserve (FOMC) meeting, this data does not have the possibility of changing interest rate decisions. Rosner believes that interest rates may remain at current levels, but will not be further adjusted
Mike Loewengart, head of model portfolio construction at Morgan Stanley's Global Investment Office, said: "Although the Federal Reserve may not change interest rates next week, the economic data released today is stronger than expected, which also means that the Federal Reserve will maintain its hawkish stance, which is to maintain its tendency towards high interest rates
Although an economic recession may still occur, over time and with improved data, the Federal Reserve seems to be achieving a soft landing of the economy with minimal damage to the economy. If you are a broad market investor, you may find comfort in being excluded from the worst-case scenario, "said eToro analyst Callie Cox
Although these data demonstrate the resilience of the economy, investors may still be aware that the risk of economic recession still exists, "said Richard Flynn, Managing Director of Charles Schwab UK
Chris Zaccarelli, Chief Investment Officer of Independent Advisor Alliance, said: "If the economic recession that people have been predicting for the past 18 months has not occurred this year, and the current economic trend continues, then the market will rebound from the low point like at the end of last year
On Thursday, gold and silver prices slightly weakened, with December gold falling by $3.50 to $1991.40. In December, silver finally fell by $0.167 to $22.84.
In the foreign exchange market, the New Zealand dollar ultimately became the strongest of the major currencies, while the Swiss franc was the weakest. The performance of the US dollar lies between the strongest and weakest currencies, with almost equal fluctuations against major currencies. In currency pairs, the exchange rate between the US dollar and the Swiss franc rose the most significantly, with an increase of 0.29%. The exchange rate of the Australian dollar against the US dollar has increased by 0.33%.
At the same time, the European Central Bank has decided to maintain interest rates at 5.0%, which is in line with market expectations. European Central Bank President Lagarde mentioned several key points. Firstly, the ECB did not clearly indicate that it had reached its peak interest rate, indicating a certain degree of flexibility in monetary policy. This decision is unanimous among decision-makers. Lagarde acknowledged that economic growth has weakened, emphasizing that the Purchasing Managers' Index (PMI) has not shown significant vitality. Importantly, she emphasized that maintaining current interest rates does not mean that interest rates will not remain unchanged for the long term, leaving room for future adjustments. Lagarde also emphasized that it is currently not appropriate to provide forward-looking guidance, and discussing the topic of interest rate cuts is considered premature. She pointed out the widespread impact of higher interest rates, and the outlook for energy prices remains uncertain due to recent conflicts. The growth risks in the eurozone continue to tilt towards a downward direction.
During Asian trading hours, the euro fell against the US dollar, but found buying support around 1.0522. Above, the 1.0561 to 1.0565 areas will become resistance areas in the new trading day.
Friday trading day focus and wind vane:
① 20:30 Monthly rate of personal expenses in September in the United States
② 20:30 US September Core PCE Price Index Annual and Monthly Rates
③ 22:00 Final Value of the University of Michigan Consumer Confidence Index for October in the United States
④ 22:00 Expected one-year inflation rate for October in the United States
⑤ The total number of oil drilling operations for the week from 01:00 the next day to October 27th in the United States
Analysis of Major Currency Trends:
EUR: EUR/USD fell, closing at 1.0562, a decrease of 0.04%. Technically, the initial resistance to the upward trend of the exchange rate is at 1.0580, the further resistance is at 1.0598, and the key resistance is at 1.0628; The initial support for the downward trend of the exchange rate is at 1.0532, further support is at 1.0503, and more critical support is at 1.0484.
GBP: GBP/USD up, closing at 1.2127, up 0.14%. Technically, the initial resistance to the upward trend of the exchange rate is at 1.2154, the further resistance is at 1.2182, and the key resistance is at 1.2224; The initial support for the downward trend of the exchange rate is at 1.2084, further support is at 1.2041, and more critical support is at 1.2014.
JPY: USD/JPY up, closing at 150.363, up 0.11%. Technically, the initial resistance to the upward trend of the exchange rate is at 150.823, further resistance is at 151.262, and the key resistance is at 151.747; The initial support for the downward trend of the exchange rate is at 149.899, further support is at 149.414, and more critical support is at 149.975.
