U.S. Stocks
Fundamental Analysis:
This week’s Fed minutes may bring some surprises to investors, but more importantly, it may shed light on the Fed’s plans for its rate hike path.
Fed Chairman Jerome Powell said at the FOMC meeting that the minutes will reveal the Fed’s discussions on deciding when to stop the rate hike cycle.
While the minutes may not reveal much new information, they will likely confirm that the Fed will not pause rate hikes in the near term.
The threshold for a pause in rate hikes is high, and the risk is that the Fed will have to raise rates to higher levels than previously expected, and that rates may stay high for much longer than previously expected.
The U.S. jobs report for January showed that the unemployment rate fell, and job openings remained high. This left nearly two job openings for each unemployed person.
Most importantly, wages rose 4.4% year-over-year in January, higher than expected, while last December’s figure was revised upward to 4.8%.
To achieve its 2% inflation target, the Fed may want to see wage growth at around 3%.
In addition, high CPI and PPI data and higher-than-expected import prices (excluding oil) suggest that inflation is not going away, although the pace of inflation has slowed.
All data suggest that the Fed is far from pausing interest rate hikes, and the market now expects interest rates to peak higher than the Fed expected last December.
The August federal funds futures contract currently stands at 5.3%, suggesting that the Fed may raise rates another 25 basis points in June.
The expectation of higher peak interest rates has helped push bond yields and the dollar higher, and high-yield credit spreads have widened, which has helped to start tightening the financial environment.
The tighter the financial environment, the more depressed stocks will be, and the effects of this tightening environment are already being felt.
As the economic situation tightens further, U.S. stock indexes such as the S&P 500 could fall further.
The minutes may confirm to the market that significant progress is still needed to achieve the Fed’s goal of suspending interest rate hikes, which should help further tighten the financial environment and begin to slow economic growth.
Technical Analysis:
(Dow 30, 1-hour chart)
Execution Insight:
The Dow pays attention to the 33584-line. today If the Dow runs stably above the 33584-line, then pay attention to the suppression strength of the 33949 and 34221 positions.
Hong Kong Stocks
Fundamental Analysis:
The three major indices of Hong Kong stocks opened slightly lower.
The Hang Seng Index (HSI) fell 0.13%, at 20,859.50 points, the Hang Seng TECH Index (HSTECH) fell 0.14%, at 4305.53 points, and the Hang Seng China Enterprises Index (HSCEI) fell 0.10%, at 7056.70 points.
On the market, large technology stocks were mixed, Xiaomi Corporation (1810.HK), Meituan (3690.HK), and Baidu, Inc. (9888.HK) rose slightly, while JD.com, Inc. (9618.HK), and Kuaishou Technology (1024.HK) were lower.
Yesterday’s strong domestic insurance stocks fell generally, China Taiping Insurance Holdings Company Limited (0966.HK) fell 2.5%, sporting goods stocks, gambling stocks were lower.
On the other hand, the Securities and Futures Commission launched a pilot project for real estate private investment fund, and domestic housing stocks rose.
The Hong Kong Securities and Futures Commission plans to allow retail investors to trade large cryptocurrencies.
Blockchain concept stocks rose sharply, Meitu, Inc. (1357.HK) rose nearly 6%, OKG Technology Holdings Limited (1499.HK) rose more than 10%, New Huo Technology Holdings Limited (1611.HK) rose more than 9%.
The adjustment time and range of Hong Kong stocks have accumulated to a certain extent, profit-taking has been digested, and the decline tends to slow down.
The lower annual line of the Hang Seng Index coincides with the 20,000-point mark, forming a strong support, and further downside is expected to be limited.
China’s supervision and management policies for real estate have been actively shifted, helping to improve the medium and long-term risk premium and earnings growth.
China’s economy is still in the weak recovery stage, and the recovery of the consumer scene will gradually be reflected in the income expectations of residents and transmitted to the final consumption.
Technical Analysis:
(HK50, 1-hour chart)
Execution Insight:
HK50 pays attention to the 21450-line today. If HK50 can run stably above the 21450-line, then pay attention to the suppression strength of the two positions of 22127 and 22785.
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