Wallstreetcn
2023.11.28 21:38
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The expectation of the end of interest rate hikes has led to a rebound in the US stock market, with Pinduoduo surging by 18%. The US short-term bond yields have experienced a double-digit plunge.

Federal Reserve officials as a whole have taken a dovish stance in their speeches. Hawkish voting member and director Waller support keeping interest rates unchanged, stating that the economic slowdown is helping inflation return to target. However, another hawkish director, Bowman, reiterated that if inflation cools and stagnates, she would lean towards supporting a resumption of rate hikes, but she did not imply an immediate rate hike. "The Fed's number three," New York Fed President Williams, subsequently stated that US inflation is rebounding in an encouraging manner.

Fed officials overall take a dovish stance. Hawkish voting member and director Waller support keeping interest rate policy unchanged, stating that the economic slowdown is helping inflation return to target. However, another hawkish director, Bowman, reiterated that if inflation cools and stagnates, he would lean towards supporting a resumption of rate hikes, but without implying an immediate increase. "The Fed's number three," New York Fed President Williams, subsequently stated that US inflation is falling in an encouraging manner. This year, voting member and Chicago Fed President Goolsbee stated that the slowdown in inflation is the largest decline in 71 years.

Waller's remarks caused US short-term bond yields to plummet by double digits, and US stocks collectively turned higher during midday trading, with gold prices rising above the $2040 level. The market is awaiting Fed Chairman Powell's speech on Friday and the heavyweight inflation data for October, the PCE, released on Thursday.

In September, the S&P CoreLogic Case-Shiller Home Price Index in the US reached a new historical high and continued to rise for the eighth consecutive month, with a year-on-year increase of 3.9%, higher than the previous value of 2.5%. This indicates that high interest rates have not yet slowed down the pace of the housing market, and rising house prices are accompanied by a rise in the average mortgage rate for 30-year loans to 8%.

The Conference Board's Consumer Confidence Index for November in the US exceeded expectations, rising to 102, the first increase in four months, with the previous value revised down to less than 100. However, the Expectations Index has been below 80 for three consecutive months, indicating that most Americans still expect an economic recession in the future.

According to Adobe Analytics, online spending on "Cyber Monday" in the US increased by 9.6% year-on-year to a record high of $12.4 billion, and total spending during the five-day Thanksgiving shopping period increased by 7.8% year-on-year to $38 billion. The National Retail Federation also stated that during the five days from Thanksgiving to "Cyber Monday," the number of shoppers on websites and in stores reached a record high of over 200 million.

Hawkish ECB policy maker and President of the German Bundesbank, Weidmann, stated that it is too early to discuss interest rate cuts and advocates for a "substantial" reduction in the balance sheet. The market is focused on the Eurozone CPI flash estimate data for Thursday, which is expected to show a decrease in inflation from the previous value of 2.9% to 2.7%.

Traders are betting that the probability of the Fed not raising rates in December is 96%, with the probability of a rate cut as early as March next year at 33%. The probability of at least a 25 basis point rate cut by May next year is close to 50%, and the market expects a 100 basis point rate cut next year. Additionally, the market expects the ECB to cut rates by 90 basis points next year.

US stocks fluctuate and turn higher, Dow hits nearly four-month high, three major indices head towards the best monthly gain in a year, Pinduoduo rises 18%

On Tuesday, November 28th, US stocks opened lower for the second consecutive day, but the Dow turned higher within the first 15 minutes of trading, boosted by industrial, consumer, and oil and gas giants such as Boeing, 3M, Nike, Walmart, and Chevron.

The Nasdaq Composite Index also opened lower and then rose, with Chinese concept stock Pinduoduo ADR surging 18% as a result of positive earnings. Gold and silver mining stocks followed the rise in gold prices. The SPDR S&P Retail ETF XRT rose by approximately 1%, leading the way. During the midday session, the dovish remarks by the hawkish voting member of the Federal Reserve, Bullard, boosted expectations of an interest rate cut, causing a collective rebound in US stocks. The S&P 500 and Nasdaq rose by a maximum of 0.4%, while the Dow Jones Industrial Average rose by 185 points. However, after that, all major stock indices except for the Dow Jones turned downward again.

In the final trading session, US stocks rose across the board, but the Russell small-cap stocks experienced a two-day consecutive decline since September 20. The Dow Jones hit its highest level in nearly four months since August 7, while the S&P 500 approached its highest level since August 1, which was set last Friday. The Nasdaq, on the other hand, experienced a two-day consecutive decline and approached its high point since July 31, which was set last Monday:

The S&P 500 rose by 4.46 points, or 0.10%, to close at 4554.89 points. The Dow Jones rose by 83.51 points, or 0.24%, to close at 35416.98 points. The Nasdaq rose by 40.73 points, or 0.29%, to close at 14281.76 points. The "fear index" VIX slightly declined but remained below 13, approaching the lowest level since January 17, 2020, when it touched 12.45.

The Russell 2000 small-cap stock index fell by 0.5%, the Nasdaq 100 rose by 0.3%, and the Nasdaq Technology Index (NDXTMC), which measures the performance of technology companies in the Nasdaq 100, rose by 0.4%. It ended the two-day consecutive decline and rebounded from the lowest level in a week. Last Monday, it reached its highest closing level in history.

The Dow Jones led the way, while the Nasdaq and S&P 500 fluctuated but ultimately rose, with all three major US stock indices rising together.

The Dow Jones has risen by approximately 7.2% in November, which will be its best monthly performance since October 2022. The S&P 500 has risen by approximately 8.6% in November, and the Nasdaq, which has risen by 11%, is about to achieve its best monthly performance since July 2022.

Tech giants performed well in the final trading session. Meta, the "metaverse" company, rose by 1.3%, Google Class A shares rose by 0.6%, and Apple rose by 0.3%, all rebounding from their lows of the week. Amazon fell by 0.5%, temporarily moving away from its highest level in 19 and a half months. Microsoft rose by 1%, reaching a new record closing high, while Netflix slightly declined but remained close to its highest level in 22 months. Tesla rose by 4.5%, reaching its highest level in six weeks after a three-day consecutive increase from its low point of the week.

Chip stocks narrowed their losses in the final trading session. The Philadelphia Semiconductor Index fell by 0.6% to a two-week low. Intel opened lower by 1% but then rose by 0.3%, approaching the 19-month high set last Monday. AMD fell by 0.5% but remained close to its highest level in five and a half months. NVIDIA fell by nearly 1%, approaching a two-week low, marking the fourth consecutive day of decline in the past five trading days. Micron Technology fell by as much as 4.6% to its largest two-month decline and closed down nearly 2% to a two-week low. AI Concept Stocks Rebound Together, C3.ai rose more than 2% to a two-week high, BigBear.ai erased nearly 4% of its decline, SoundHound.ai rose more than 2% to a three-month high, and Palantir Technologies rose more than 3%, ending a four-day consecutive decline and breaking away from a two-and-a-half-week low.

In terms of news, Amazon released an upgraded AI chip Trainium2 and an AI chat tool Amazon Q for enterprise customers. AWS imitated competitors Microsoft and NVIDIA to expand partnerships. Amazon also stated that "Black Friday" and "Cyber Monday" shopping activities reached record highs. Micron Technology, the largest computer memory chip manufacturer in the United States, raised its revenue forecast for the next quarter, but predicted an increase in operating expenses and maintained a loss per share, falling about 6% before the market opened. Tesla delivered the first batch of electric pickup trucks, Cybertruck, this week. NVIDIA expanded its autonomous driving team in China led by the former vice president of Xiaopeng Motors.

Mixed performance of popular Chinese concept stocks. ETF KWEB rose 0.9%, CQQQ rose 0.8%, but the Nasdaq Golden Dragon China Index (HXC) fell 0.3%, falling for two consecutive days to a one-week low.

Among the Nasdaq 100 constituents, JD.com fell 0.6%, Baidu fell 3.5%, and Pinduoduo rose 18%. In other individual stocks, Alibaba's decline narrowed significantly to 1%, Tencent ADR's decline narrowed significantly to 0.3%, and Bilibili fell 2.6%. NIO's stock fell more than 2% and then rose 0.3%, Xiaopeng Motors rose nearly 1%, and Li Auto rose 1.5%.

In terms of news, Pinduoduo's third-quarter revenue increased by 94% year-on-year, far exceeding expectations and reaching a new historical high. Adjusted net profit surged 37% to 17 billion yuan, and the stock price reached a new intraday high since June 2021. Executives stated that the company is still in the development stage, and the priority goal is to strengthen the platform.

Bank stocks rebounded in the late trading session but still lingered at a two-week low. The industry benchmark Philadelphia Stock Exchange KBW Bank Index (BKX) fell 0.4% and then rose 0.3%, reaching the lowest level in three years since September 2020 at the end of October. The KBW Nasdaq Regional Banking Index (KRX) significantly narrowed its decline to 0.2%, reaching the lowest level since November 2020 on May 11. Morgan Stanley fell 2% to a two-week low at one point, and Societe Generale downgraded its rating on Morgan Stanley to hold due to growth pressure, lowering the target price from $95 to $80.

Other stocks with significant changes include:

"Buy Now, Pay Later" payment leader Affirm rose more than 11%, rising for four consecutive days to a 15-and-a-half-month high, and rose nearly 16% at one point yesterday. Brokerage firm Jefferies revoked its downgrade rating, and data showed that the usage rate of "Buy Now, Pay Later" on "Cyber Monday" reached a historical high. Canadian e-commerce platform Shopify fell 0.4%, breaking away from its 20-month high. It has seen a cumulative increase of 55% in November, which will set a record for the best monthly gain in history. Brokerage firm Piper Sandler downgraded its rating to "hold," stating that the market's growth and profit expectations are too aggressive, resulting in an overvaluation of the stock.

Global fashion industry platform Farfetch, known as the "Amazon of luxury goods," saw a short-term surge in its stock price, reaching a two-month high with a maximum increase of 31%. Reports suggest that its founder is in talks to take the company private.

Online fast fashion company Shein has secretly filed for an IPO in the United States and may start trading next year. It could become one of the largest IPOs in years, with a valuation of approximately $66 billion from its funding round in May, or it may seek an even higher valuation.

Private equity asset management firm KKR Group, which manages nearly $400 billion in assets, reached a four-month high with a maximum increase of 7.6%. It will be included in the S&P MidCap 400 Index starting from Thursday.

Boeing reached a three-month high with a maximum increase of 2.5%. RBC Capital Markets upgraded its rating to "buy" and raised the target price from $200 to $275. It is optimistic about the growth in demand in the commercial and defense sectors, with a more positive outlook for 2024.

European stocks fluctuated, with the UK and France stock indices closing lower. The pan-European Stoxx 600 index fell by 0.30%, marking a two-day consecutive decline since September 20. Most sectors experienced a downturn. French video game publisher Ubisoft, which issued convertible bonds, fell by 9%. Bayer's European and US stocks both fell by over 3%, approaching the lowest level since 2005.

2 to 5-year US Treasury yields fall by more than 10 basis points, long-term yields hit a two-month low

Short-term US Treasury yields fell by double digits, with 2 to 5-year yields dropping by at least 10 basis points and long-term yields hovering at a two-month low.

The two-year Treasury yield, which is more sensitive to monetary policy, fell from a daily high of 4.89% to a deep decline of 16 basis points to 4.73%, the lowest level in three and a half months since August 10. The 10-year benchmark bond yield fell by 9 basis points from a daily high of 4.43% to 4.33%, hitting the lowest level in over two months since September 20. The 30-year long-term bond yield fell by 6 basis points from a daily high to 4.51%, also hovering at a two-month low.

2 to 5-year US Treasury yields fall by more than 10 basis points, long-term yields hit a two-month low European bond yields fell for two consecutive days, following the decline in US bond yields. The yield on 10-year German government bonds, the benchmark for the eurozone, fell by 5 basis points to below 2.50% at the close of trading, after a 9 basis point drop yesterday. It had reached a twelve-year high of 3.024% at the beginning of October. The 2-year yield also fell by 8 basis points to a daily low of 2.92%.

The yield on 10-year Italian government bonds, which have a higher debt burden than peripheral countries, fell by 3 basis points, following a 10 basis point drop yesterday. It had reached an eleven-year high of 5.025% in October. The yield on 10-year UK government bonds also fell by more than 3 basis points. Analysts believe that the possibility of further interest rate hikes has decreased due to slowing inflation, causing European and US bond yields to significantly retreat from the multi-year highs reached in October.

Oil prices rise by 2% as Brent crude surpasses $80 and natural gas hits a two-month low in Europe and the US

Reports suggest that OPEC+ negotiations are facing difficulties and have not yet reached an agreement on production quotas for African oil-producing countries. The heavyweight oil production decision-making meeting scheduled for this week may be further postponed. International oil prices fell in the short term, but rose by 2% overall, with Brent crude surpassing the psychological level of $80.

January WTI crude oil futures rose by $1.55, or 2.07%, to $76.41 per barrel. January Brent futures rose by $1.70, or 2.13%, to $81.68 per barrel.

WTI crude oil reached a high of $2.15, or 2.9%, briefly surpassing $77, while Brent crude oil futures for February, which have more active trading, reached a high of $2.09, or 2.6%, attempting to break through $82. Both prices are close to recovering from the decline since last Friday and have moved away from the low levels of the past week. Insiders revealed that it may be difficult to deepen production cuts, and the continuation of the current production policy is a possibility.

Oil prices rise by 2%, with Brent crude surpassing $80

TTF Dutch natural gas futures, the European benchmark, fell by 2.5% to the lowest level in over seven weeks since early October, while ICE UK futures fell by more than 2% and fell below 110 pence/therm. EU carbon prices continued to hit a new low of over a year and fell towards the €70 mark. US natural gas fell by more than 3%, declining for two consecutive days to a two-month low, as previous forecasts of warmer weather weakened expectations for heating demand.

The US dollar falls below 103 to a three-and-a-half-month low, offshore RMB briefly surpasses 7.14 yuan, and Bitcoin rises above $38,000

The US dollar index, which measures against six major currencies, fell by 0.6% and fell below the 103 level, declining for four consecutive days to the lowest level in three and a half months since August 11. It has fallen by more than 3% in November, on track to deliver its worst monthly performance in a year since a 5% decline in November last year. USD Falls to 3.5-Month Low at 103

Non-US currencies rise across the board. The euro briefly rose above 1.10 against the US dollar for the first time since August, reaching its highest level since August 10. The pound rose above 1.27 to its highest level since the end of August, with a cumulative increase of about 3.8% in November, marking the largest monthly gain in a year.

The yen rose 0.9% against the US dollar and broke through 148, hovering at its highest level in two months since mid-September. Offshore renminbi briefly rose above 7.14 yuan, up 220 points from the previous day's close, hovering at its highest level in four months since the end of July. The Australian dollar also approached its highest level in four months.

Mainstream cryptocurrencies rise together. Bitcoin, the largest cryptocurrency by market capitalization, rose more than 3% and broke through the $38,000 mark, reaching its highest level in 19 months since April last year. The second-largest cryptocurrency, Ethereum, rose more than 3% to $2,060, having previously risen above $2,100 at the beginning of the month to a seven-month high.

Gold price breaks through $2,040 to a six-month high, copper rises more than 1% approaching a two-month high, nickel breaks away from a three-year low

Market bets that the Federal Reserve has completed its rate hikes, and the decline in the US dollar and US bond yields continue to support the gold price.

COMEX December gold futures closed up $27.60, or 1.4%, at $2,040, rising for the fourth consecutive day to a six-month high since mid-May. The March 2022 silver futures contract rose 1% to $25, reaching its highest level in nearly three months since September 1.

Spot gold rose nearly $29 or 1.4%, breaking through the $2,040 mark, rising for the fourth consecutive day to a seven-month intraday high since April 30, and approaching the historical high of $2,080.

Gold price breaks through $2,040 to a six-month high, approaching historical high

UBS previously stated that considering the Federal Reserve will cut interest rates at some point, it predicts that the gold price will rise to a new high of $2,150 by the end of 2024. However, some analysts believe that if US third-quarter GDP and inflation indicators are stronger than expected this week, it will weaken the attractiveness of gold.

London industrial metals rise across the board. The "Copper Doctor," a leading economic indicator, rose more than $100 or 1.3%, surpassing the $8,400 mark and approaching the two-month high of $8,486 set last week. London aluminum closed slightly higher, still hovering at a one-week low, while London zinc closed slightly lower, continuing to move away from the one-week high. London lead closed slightly lower, further away from the highest level since May last year. London nickel rose nearly $700 or 4.3%, moving away from a three-year low. London tin, which fell $900 or 3.8% yesterday, rebounded by 1.5%, rising above $23,000 and moving away from an eight-month low. Shanghai nickel rose more than 3.1% in the night session, and stainless steel rose more than 1.6%.