China’s measures to relax epidemic prevention measures to restart the economy boosted market sentiment, and major US stock indexes opened higher on Wednesday (28th). Before the deadline, the Dow Jones Industrial Average rose more than 100 points or nearly 0.3%, the Nasdaq Composite Index rose more than 40 points or nearly 0.4%, the S&P 500 Index rose nearly 0.4%, and the Philadelphia Semiconductor Index rose nearly 0.4%.
Major U.S. stock futures edged higher in premarket trading as further steps by China to restart its economy modestly boosted investor sentiment in the final week of a dismal year for markets.
Next year, China will abolish the quarantine requirements for inbound tourists, and begin to resume in an orderly manner the acceptance and approval of ordinary passports for Chinese citizens traveling abroad and visiting friends, as well as endorsements for tourism and business in Hong Kong; at the same time, it will resume accepting and approving ordinary visa applications for foreigners. In addition, the Hong Kong government announced on Wednesday that it will completely cancel the mandatory nucleic acid testing and social distance measures for entry, and plans to implement customs clearance before January 15 next year.
Foreign media reported that although China’s restart measures are expected to boost the global economy, they have also raised public concerns about inflationary pressures, which may prompt the Federal Reserve (Fed) to maintain a tight monetary policy.
The still-cautious mood dampened investor hopes for a rebound in the final week of the year after a brutal year for financial markets. Global stocks lost a fifth of their value in the biggest annual drop since 2008, while a global bond index fell 16%, while the dollar surged 7% and U.S. 10-year Treasury yields jumped to more than 3.8% from 1.5% at the end of 2021 .
In energy, international oil prices fluctuated due to weak liquidity and Russia’s ban on exporting oil to customers participating in oil price cap sanctions. Before the deadline, Brent crude oil futures due in February next year fell 0.25%; WTI crude oil futures due in February next year rose 0.1%.
Goldman Sachs analysts reported Wednesday that the U.S. will avoid a recession next year and continue heading toward a soft landing. The U.S. economy will grow below potential for some time, but enough to gradually rebalance the labor market and keep wage and price pressures in check, analysts explained.
Goldman also said the drag from tightening fiscal and monetary policy would ease sharply next year, in stark contrast to the consensus that the lagged effects of rate hikes would lead to a recession next year.
In addition, analysts also believe that the first step of this year’s rebalancing process has been quite successful. The gap between job openings and workers “closed rapidly at a small cost. He pointed out that there is still a lot to do next year.
As of 22:00 on Wednesday (28th) Taipei time: Focus stocks:
Tesla (TSLA-US) rose 3.12% in early trade to $112.50 per share
The stock price of Tesla, the leader of American electric vehicles, rose 1.6% in a pre-market shock, after the stock fell for 7 consecutive days, and fell in 10 of the past 11 trading days. Wall Street investment bank Baird lowered Tesla’s target price from $316 to $252 per share, but maintained an “outperform” rating on the stock.
AMC Entertainment (AMC-US) rose 1.24% in early trade to $4.08 per share
U.S. movie theater chain AMC Entertainment rose 1.2 percent in pre-market trading after Chief Executive Adam Aron asked the board to freeze his pay for next year, while urging other executives to forego raises in a tweet. With the rise of the streaming media business and the reduction in the number of blockbusters in more than 900 theaters, AMC’s stock price has fallen by more than 75% this year and exacerbated cash consumption and losses.
Southwest Airlines (LUV-US) fell 2.42% in early trade to $33.12 per share
The holiday travel chaos continued to worsen this week, with major flight cancellations or delays across the U.S. due to harsh winter storms. Among them, Southwest Airlines (Southwest Airlines) has received the most criticism. When most airlines began to resume flights, the company canceled more than 60% of its flights on Tuesday (27th) and Wednesday (28th). Shares of Southwest Airlines fell 1.3% in premarket trading.
Today’s key economic data: U.S. November seasonally adjusted existing home sales index reported – 4%, expected – 0.8%, previous value – 4.6% U.S. December Richmond Fed manufacturing index reported 1, expected – 10 , Ex-Value-9 Wall Street Analysis:
Economists at PNC Financial Services Group forecast inflation returning to the Fed’s 2% target by late 2023 or early 2024. “U.S. inflation will moderate in early 2023 as commodity and housing prices decline, then in late 2023 and early 2024 as the labor market softens,” PNC chief economist Gus Faucher said in a newly released report. Wage growth has been constrained and inflation continues to slow.
Matt Maley, chief market strategist at Miller Tabak + Co., said the Fed may start cutting interest rates later next year, but that would only happen when the economy is much worse than it is now, but if the economy is only slowly slowing, the Fed will Will keep interest rates at peak even if they stop raising them.
