uS-shares rebounded from session lows and closed higher ahead of the Fed meeting later this week. While the 10-year US bond yield ends on a 10-year high, the 2-year bond yield is making a fresh 15-year high, signaling another sharp hike in interest rates. The Fed is expected to hike interest rates by at least 75 basis points on Thursday. Despite a rise in bond yields, the US dollar was unchanged, with the dollar index slipping slightly by 0.14% to 109.61.
- The Dow was up 0.64%, the S&P 500 was up 0.69% and the Nasdaq was up 0.76%.. Nine of the 11 sectors in the S&P 500 ended higher, with materials and consumer discretionary leading gains while healthcare and real estate stocks were lower. Most mega cap tech stocks closed higher. Apple was up 2.72%, Meta Platforms was up 1.18% and Tesla Motors was up 1.95%. Ford’s shares fell 5% in after-hours trading The automaker warned of additional supply chain costs of $1 billion in the third quarter.
- China ramps up cash injection by cutting its 14-day repo rate to 2.15% from 2.25%, 12 billion yuan injected through both 7-day reverse repos and 14-day maturity. The PBOC’s decision on interest rates for 1-year and 5-year loans will be closely watched today, but the bank may leave rates on hold to stabilize the yuan. China’s central bank faces a dilemma of stimulating a weak yuan and a sluggish economy. USD/CNH closed just above 7 after hitting 7.0257 daily high. A break above 7.04 recent high could take the pair to 7.20, May 2020 high.
- Most regional markets across Asia are expected to open higher after the upbeat finish on Wall Street and a rate cut in China. ASX futures were up 0.82%. Nikkei225 futures were flat and Hang Seng index futures were up 0.64%. RBA policy meeting minutes will be released today at 11:30am AEST when the Reserve Bank is likely to highlight concerns about economic growth with a less hawkish stance on its monetary policy.
- Most major currencies reversed early losses against the US dollar as traders await guidance from the Fed. EUR/USD edged just above parity levels on the fourth day of trading, while USD/JPY edged up to 143.23 this morning. Commodity currencies including AUD, CAD and NZD all consolidated above recent lows.
- Both gold and oil prices also recovered from daily lows, which ends flat due to a pullback in the US dollar. As for crude oil markets, the Fed meeting could overshadow supply concerns as the dollar’s movement becomes the main driver of oil prices.
- Bitcoin bounced off a new two-year low. The largest market cap token remained flat above 19,500 this morning after hitting a fresh 2-year low below 18,300 on Monday, making the daily low of 18,232 a key support.
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