The latest “small non-farm payrolls” report in the United States showed a weak job market, boosting investors’ expectations that the Federal Reserve (Fed) has ended its current tightening cycle and will cut interest rates as soon as March next year. The major U.S. stock indexes opened on Wednesday (6th) high.
before deadline,Dow Jones Industrial Averagerose nearly 80 points or nearly 0.2%,Nasdaq Composite Indexrose more than 50 points or nearly 0.4%,S&P 500 Indexrose nearly 0.3%,Philadelphia SemiconductorThe index rose nearly 1%.
The ADP employment report released by the United States on Wednesday, known as the “small non-agriculture”, showed that the number of U.S. private enterprise employment increased by 103,000 in November on a seasonally adjusted basis, which was far lower than the 130,000 expected by economists. 113,000 was revised sharply down to 106,000. U.S. companies scaled back hiring in November, further evidence that the job market is cooling.
After the data was released, the market strengthened expectations that the Fed would end its aggressive interest rate hikes and start cutting interest rates next year. Major index futures rose, withS&P 500 IndexFutures were set to snap two days of losses, while the yield on the more rate-sensitive two-year U.S. Treasury note hovered around 4.6%.dollar indexfluctuation.
Brown Brothers Harriman & Co. analyst Win Thin believes that a series of firm U.S. data may be needed to truly challenge the Fed’s current dovish remarks. He pointed out that even if the rest of the world enters recession and the U.S. economic growth continues to be maintained or higher than expected, price pressure remains and the Fed may not be able to cut interest rates as quickly as market expectations.
In terms of other economic data, U.S. mortgage rates fell to a new low in nearly four months last week, stimulating the largest refinancing demand since February this year.
On the energy front, international oil prices fell for a fifth consecutive trading day as heavy U.S. exports and doubts about whether the Organization of the Petroleum Exporting Countries and partners (OPEC+) can achieve their planned production cuts raised concerns about oversupply.
As of 22:00 Taipei time on Tuesday (6th):
apple (AAPL-US) rose 0.07% in early trading to $193.56 per share
Apple’s iMessage service appears on track to avoid new European Union antitrust sanctions aimed at curbing big tech platforms after EU regulators initially concluded that iMessage wasn’t popular enough among business users to be affected by the rules. It is reported that European Commission officials are inclined to suspend penalties against Apple as part of a five-month market investigation that will end in February next year.
Microsoft (MSFT-US) rose 0.03% in early trading to $372.63 per share
U.S. antitrust enforcers believe that a federal judge erred in ruling that Microsoft’s $69 billion acquisition of Activision Blizzard, the developer of the “Call of Duty” game, complied with competition law. There will be another round of discussion on the matter on Wednesday (6th). The challenge is the latest attempt by authorities to block the deal.
NIO (NIO-US) rose 2.85% to $7.64 per share in early trading
According to foreign media reports, Chinese electric vehicle manufacturer NIO plans to spin off its battery manufacturing unit as part of the company’s efforts to turn a profit, reduce costs and improve efficiency. NIO’s new battery unit will be led by senior manufacturing engineers who previously worked at Apple (AAPL-US) and Panasonic. The unit will seek outside investors after it is spun off as soon as the end of this year, with a valuation to be decided later.
Today’s key economic data:
- U.S. ADP employment in November changed to 10.3, expected 120,000, and the previous value was 106,000
- The U.S. trade balance in October reported – $64.3 billion, expected – $61.5 billion, and the previous value – $61.2 billion
Wall Street analysis:
BlackRock global strategist Wei Li believes that the Fed may cut interest rates less frequently than market expectations, and interest rate fluctuations may lead to greater turbulence in global markets next year. Interest rate futures data show that traders expect the Fed to cut interest rates by 125 basis points next year. The strategist believes that relevant expectations may be overly optimistic, so once the market realizes the variables, the stock market may fluctuate greatly.
Morgan Stanley analysts said that the stock market is repeating the mistakes of 17 years ago, hoping that the Fed’s interest rate cut will drive the stock market to rise sharply again, but the results may disappoint investors. The market expects the Fed to cut interest rates in the later stages of the economic cycle, when economic growth tends to slow down and there is even a risk of falling into recession. This could result in lower-than-expected stock market returns.
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