U.S. 10-year Treasury yieldThe decline has slightly boosted the trend of growth stocks that are sensitive to interest rates. However, the gains were limited by the decline in Apple’s share price. Apple reported that it had abandoned its plan to increase production of the iPhone 14 series. It fell nearly 4% in early trading. The major US stock indexes opened on Wednesday (28th). Mixed ups and downs then turned up across the board.
Before the deadline,Dow Jones Industrial Averagerose more than 100 points or nearly 0.4%,Nasdaq Composite Indexrose 0.1%,S&P 500 Indexrose nearly 0.4%,Philadelphia SemiconductorThe index rose 0.13%.
The dollar hit another record high following the White House downplayed the prospect of a currency deal to weaken the greenback. On the other hand, the Bank of England said that in order to restore order in the bond market, it will purchase long-term government bonds in the UK at any necessary scale. After the announcement, British government bonds soared across the board.GBPThe exchange rate once morest the dollar plummeted.At the same time, the United States 10-year Treasury yieldAfter rising above 4%, it fell slightly and is now at 3.872%.
UK 30-year bond yields fell the most since 1996, erasing their biggest gain since 1998.GBPIt bounced back initially, but fell back amid growing global criticism of Prime Minister Liz Truss’s historic tax cut plans,GBPAgainst the greenback, it was down 0.88% at $1.0634.
Bank of England says purchases will be as high as $5 billion per operationGBP, and is ready to buy traditional government bonds with a remaining maturity of more than 20 years in the secondary market. In addition, the Bank of England will also postpone the quantitative tightening bond sale originally scheduled to start on Monday.
However, people familiar with the matter said the Bank of England announced unlimited, immediate purchases of long-term bonds because of fears that there would be collateral redemption calls as early as Wednesday followingnoon, which might trigger a further plunge in government bonds.
The International Monetary Fund (IMF) urged the British government to “re-evaluate” the plan, warning that the “ill-targeted” package might spark a spike in inflation. In its first assessment of Britain’s situation, credit-rating agency Moody’s warned that massive, unfinished tax cuts in Britain would trigger higher borrowing costs and reduce economic growth in the medium term.
Mohamed El-Erian, chief economic adviser at Allianz, said that means the Bank of England needs to raise rates by at least 4 yards (100 basis points) at its Nov. 3 meeting.
U.S. index futures fell, and European stocks continued their decline. Citigroup strategists cited data from emerging fund of funds research (EPFR Global) that European equity funds have outflowed $98 billion in the past eight months, accounting for 6% of assets under management. The cumulative redemption scale is more severe than the sell-off caused by the epidemic in 2020, and it is also the same as that in 2011-2012.EURregion crisis. Analysts also said this might be a contrarian signal to buy.
In currency markets, a stronger dollar weighed on other currencies includingEURandRMB,inRMBThe exchange rate once morest the dollar fell to a new low since 2008.Meanwhile, the People’s Bank of China has asked domestic banks to restore theRMBFixing tools to guide and defend rapidly weakeningRMBand China’s central bank is urging banks to incorporate so-called countercyclical factors into their dailyRMBexchange rate midpoint.
JPYIt remained near levels that sparked Japanese government intervention, fueling speculation the authorities might intervene further, possibly through bond sales to provide funding.
On the energy front, while two Nord Stream gas pipelines were vandalized, Gazprom warned that the last gas pipeline to Western Europe might face a lingering legal battle over transit fees. Supply interruption risk.
As of 21:00 on Wednesday (28th) Taipei time:
Stocks in focus:
apple (AAPL-US) fell 4.01% to $145.67 a share in early trade
Earlier, foreign media reported that Apple is abandoning plans to increase production of new iPhones this year due to an unexpected surge in demand. The news not only hit Apple’s stock price down nearly 4% before the market on Wednesday, but also Apple’s chip makers and European suppliers. Chiyu’s disaster went down.
Biogen (BIIB-US) rose 39.06% to $275.04 a share in early trade
Eisai, a Japanese pharmaceutical company, announced on Wednesday that it will join forces with US pharmaceutical company Biogen (Biogen).BIIB-US) The Alzheimer’s treatment drug “Lecanemab” jointly developed by the joint research and development, its effectiveness has been confirmed in the third phase of clinical trials in the final stage of development, it can slow down the progression of Alzheimer’s disease, and effectively reduce cognition and brain by 27%. functional decline. Wei Cai aims to submit an application for review in the United States as soon as the end of 2022. Biogen’s stock price surged more than 50% on the news.
Lyft(LYFT-US) rose 1.13% to $14.30 a share in early trade
Lyft has announced that it will freeze hiring until the end of the year due to the uncertain economic outlook, becoming the latest company to be forced to cut expenses due to the high inflation load. The company laid off nearly 60 people at its rental car division in July, bringing Lyft’s total workforce to nearly 5,000 as of June 30, according to its SEC filing.
Today’s key economic data:
- U.S. merchandise trade balance in August was reported at -$87.3 billion, compared with -$90.19 billion previously
- The initial monthly growth rate of U.S. wholesale inventories in August was 1.3%, expected 0.4%, and the previous value was 0.6%
- US August pending home sales reported a monthly rate of -2%, expected -1.4%, the previous value of -1%
- U.S. existing home sales in August reported an annual rate of – 22.5%, expected – 24.5%, the previous value – 22.5%
- The change in U.S. EIA crude oil inventories last week is expected to be 443,000 barrels, the previous value of 1.142 million barrels
- U.S. EIA gasoline inventories last week expected 709,000 barrels, the previous value of 1.569 million barrels
Wall Street Analysis:
Nanette Hechler-Fayd’herbe, chief investment officer at Credit Suisse Group International Wealth Management, said such a strong rise in U.S. Treasury yields is attracting inflows into the dollar. The dollar is expected to be very strong as long as global monetary and fiscal policies do not strengthen local currencies.
Deutsche Bank Chief Executive Christian Sewing expects a severe downturn in the European economy and volatility in European stocks might continue for another year as central banks tighten interest rates to fight inflation.
