Wall Street under pressure and Asian stock exchanges substantially on attention on Fed Day, the day on which Jerome Powell’s Fed will make the big announcement on US rates. Futures on the Dow Jones, the S&P 500 and the Nasdaq lost 0.23%, 0.27%, 0.38% respectively. In Asia, the Nikkei index of the Tokyo Stock Exchange rose by just 0.07%; Hong Kong +0.74%, Shanghai +0.46%, Sydney +0.33%, Seoul +0.68%.
Going back to Fed Day, the market is betting on a 25 basis point hike in fed funds rates.
In the last meeting of 2022, the FOMC raised rates by 50 bp, bringing them to the range between 4.25% and 4.5% and slowing down the pace of rate hikes after four consecutive 75 bp tightenings.
The latest projections by monetary policy makers – contained in the dot plot – indicate rates rising above 5% this year, a level they should remain at until 2024.
Yesterday Wall Street did not allow itself to be intimidated by the imminent announcement of the American central bank, closing a highly satisfying month of January with a sharp rise.
In the day before the session, the Dow Jones Industrial Average jumped 368.95 points (+1.09%) to 34,086.04. The S&P 500 rallied 1.46% to 4,076.60, while the Nasdaq Composite advanced 1.67% to 11,584.55, finishing the best January since 2001. The The S&P 500, which finished its best January since 2019, up 4.64% year-to-date.
The roundup of US quarterly reports continues: this is the busiest week of announcements on the accounts.
Yesterday, 30 companies accounting for 6.8% of the market capitalization of the S&P 500 announced their results, after 38.9% had released their earnings in the previous days.
According to a note Credit Suisse sent to clients, earnings are staying ahead of estimates by 2%, and about 63% of companies surprised on the upside with earnings releases.
However, the Swiss banking giant added that, on average, Corporate America EPS is expected to drop by 0.9%.
On Wall Street, the Snap stock slipped in afterhours trading, after the accounts for the fourth quarter of 2022 showed worse than expected turnover. The stock falls by about 15%.
In Asia, from the macroeconomic front, the PMI manufacturing index drawn up by the private company Caixin was published, rising slightly to 49.2 in January, compared to the previous 49, thus remaining in a contraction phase, as it is below the threshold of 50 points, between an expansion phase (values above 50 points) and a contraction phase (below 50 points).
The trend of the Chinese manufacturing PMI compiled by Caixin clearly contrasts with the official numbers released on the eve by the Beijing government: numbers that indicated a strong recovery.
The official PMI manufacturing index stood at 50.1 points, the record level since September 2022.
Bad news also from Japan, with the manufacturing index drawn up by the Jibun Bank which was confirmed in January at 48.9, in a contraction phase, and at its lowest since October 2022.
Finally, South Korea suffered its worst trade deficit in history, amounting to $47.5 billion in 2022: it is the worst figure since the national agency began compiling it in 1956: as it surpassed the previous negative record of deficit of $20.6 billion reported in 1996.