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Oil and Gold Prices Drop
The latest news indicates that the Federal Reserve's meeting minutes have revealed significant internal disagreements. According to the recently disclosed minutes, the Federal Reserve decided to initiate a rate-cutting cycle with a 50 basis point reduction, but many members were in favor of a 25 basis point cut, showing considerable divergence in views on the economy and policy stance.
In the early hours of October 10th Beijing time, the three major U.S. stock indices all closed higher, with the Dow Jones Industrial Average up by 1.03%, the Nasdaq Composite up by 0.6%, and the S&P 500 up by 0.71%, with both the Dow and the S&P 500 reaching new closing highs.
Chinese concept stocks continued to readjust, but the decline has narrowed. The NASDAQ Golden Dragon China Index fell more than 3% at the beginning of the trading day, and by the close, the decline had narrowed to 1.29%. Stock indices in the Asia-Pacific region showed mixed results.
01 Federal Reserve's September Meeting Minutes Expose Rate Cut Disagreements
In the early hours of October 10th Beijing time, the Federal Reserve released the minutes of the June Federal Open Market Committee (FOMC) policy meeting.
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At the September interest rate meeting, the Federal Reserve lowered the benchmark policy rate from 5.25% to 5.50%, which had been maintained since July 2023, to a range of 4.75% to 5.00%. The resolution showed that only one person voted against this decision, but the latest minutes revealed the members' divergent opinions on rate cuts.
The minutes stated that Federal Reserve policymakers referred to their first rate cut as a "reassessment" of monetary policy to explain the significant decrease in inflation rates from the high levels of 2022 and 2023, and from some perspectives, even though the economy remains relatively strong, it is close to the Federal Reserve's 2% target.
Participants who favored a 50 basis point rate cut believed that readjusting the monetary policy stance would bring it more in line with recent inflation and labor market indicators. Some members also stated that a rate cut at the July meeting was "reasonable," and the data since then has only supported a more accommodative policy.
Although only Federal Reserve Governor Bowman cast a dissenting vote, there were still many within the committee who supported a 25 basis point rate cut, with some members indicating that they could have supported such a decision. "Several participants stated that a 25 basis point reduction would be in line with a gradual path of policy normalization, which would give policymakers time to assess the degree of policy restraint in the economic development process. Some participants also added that a 25 basis point change might signal a more predictable path for policy normalization."
In terms of economic prospects, almost all participants believed that the upside risks to the inflation outlook have diminished, while the downside risks to the employment outlook have increased.**U.S. Stock Market: Major Indices Close Higher, Chinese ADRs' Decline Narrows**
On the early morning of October 10th Beijing time, the three major U.S. stock indices closed higher collectively, with the Dow Jones Industrial Average and the S&P 500 reaching new historical highs. By the close, the Dow Jones Industrial Average rose by 431.63 points, to 42,512.00 points, a gain of 1.03%; the S&P 500 index increased by 40.91 points, to 5,792.04 points, a gain of 0.71%; the Nasdaq Composite rose by 108.70 points, to 18,291.62 points, a gain of 0.6%.
Most large-cap technology stocks were up, with Broadcom rising nearly 3%, Apple and Amazon both up over 1%, Microsoft closing up 0.66%, Tesla and Google both down over 1%, and Nvidia slightly down by 0.18%.
Semiconductor equipment and materials, cruise concept stocks, and insurance stocks led the gains, with Norwegian Cruise Line up over 10%, Carnival Corporation & plc up over 7%, Ambarella Inc. up over 3%, ASML up over 2%, and the American Re-Insurance Group up over 1%. Cryptocurrency, shipping, precious metals, and mining sectors declined, with Canaan Inc. and Riot Platforms both down over 4%, ZIM Integrated Shipping Services down over 4%, Himalaya Shipping down over 3%, and Hecla Mining down over 1%.
Recently, the Global Research Department of Bank of America stated that the market expects the combined earnings per share of U.S. listed companies for the third quarter to grow by 4% year-over-year, which is not a high threshold compared to the 11% year-over-year increase in the second quarter of this year. The Global Research Department of Bank of America expects the earnings growth of listed companies for the third quarter to be 2%. The department also stated that the focus is not on the third-quarter performance, but on the market's expectations for it, and investors need to pay attention to the statements of executives of listed companies in sectors sensitive to interest rates.
Chinese ADRs continued to adjust, with the NASDAQ Golden Dragon China Index initially falling by more than 3%, but by the close, the decline narrowed to 1.29%. Among popular Chinese ADRs, NetEase fell by more than 5%, iQIYI and Full Truck Alliance both fell by more than 3%, Weibo, Pinduoduo, and Tencent Music all fell by more than 2%, Baidu, JD.com, Alibaba, and Futu Holdings all fell by more than 1%, while Li Auto and Bilibili slightly declined. XPeng Motors rose by more than 3%, Ctrip.com closed up by 1.48%, Fangdd closed up by 6.02%, NIO closed up by 0.8%, and VIPShop closed up by 0.48%.
Oil prices fell for the second consecutive day, but the decline was narrower than the previous day, with the November U.S. crude oil contract down by 0.29%, at $73.36 per barrel; the December Brent crude oil contract down by 0.65%, at $76.68 per barrel.
The continued strength of the U.S. dollar and U.S. Treasury yields suppressed the performance of precious metal prices. Spot gold fell by more than 0.5%, with the December COMEX gold futures closing down by 0.55% to $2,626.1 per ounce; spot silver fell by more than 0.5%, with the December COMEX silver futures closing down by 0.52% to $30.73 per ounce.
As of the close on October 9th, Asia-Pacific stock indices showed mixed results. The S&P/ASX 200 in Australia closed up by 0.13%, at 8,187.4 points; the Nikkei 225 in Japan closed up by 0.87%, at 39,277.96 points, crossing the 39,000-point threshold; the South Korean stock market was closed for one day.
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