The minutes of the latest Fed meeting will be released soon. In addition, the ISM non-manufacturing index and JOLTs job vacancy data will also be released one after another. The market is waiting for the Fed news and data to be announced. Investors are increasingly worried about the economic recession. The minutes were highly anticipated, and U.S. stocks opened flat and lower on Wednesday (6th).
At the time of writing, the Dow Jones Industrial Average fell 0.05%, the Nasdaq Composite fell 0.08%, the S&P 500 fell 0.12%, and the Philadelphia Semiconductor Index fell 0.15%.
Recession fears are everywhere, and the 10-year yield, the best barometer for longer-term growth expectations, has fallen to 2.77% from a multi-year high of around 3.5% in mid-June.
According to the latest media forecasts, the probability of the United States falling into recession next year is currently 38%. Bond traders expect a reversal in the Fed’s monetary policy, with the current hawkish stance replaced by a rate cut in mid-2023.
The root of the problem is that the Fed has to quickly raise interest rates to combat stubborn high inflation. The Fed will release the minutes of its latest meeting later, which will provide a glimpse into the likely path of future monetary policy. Markets are expecting to see more signs of rate hikes, hoping the next rate hike will be two yards (50 basis points) rather than three yards (75 basis points).
On the energy front, the price of West Texas Intermediate (WTI) crude oil futures (WTI) has fallen about 15% over the past month to $100 a barrel. Wall Street investment bank Goldman Sachs believes that the decline caused by recession fears appears to be overdone.
In addition to the Fed’s latest meeting minutes, the ISM non-manufacturing index and JOLT job vacancies data will also be released, providing a look at U.S. business activity and job market conditions.
In terms of digital assets, Voyager Digital, a cryptocurrency investment platform, filed for bankruptcy protection due to losses of more than $650 million due to the collapse of hedge fund 3 Arrows Capital. Voyager Digital stopped customer withdrawals two weeks ago. In addition, Alameda Research, the hedge fund owned by FTX founder Sam Bankman-Fried, is expected to be affected by the bankruptcy of Voyager Digital.
Although the news of bankruptcy in the cryptocurrency industry has resumed, prices still generally rebounded. According to CoinGecko data before the deadline, Bitcoin rose 3.3% to $20,145.38 within 24 hours, returning to the top of $20,000; Ether rose 3.2% to $1,134.48 .
As of 21:00 on Wednesday (6th) Taipei time:
Stocks in focus:
Tesla (TSLA-US) fell 1.23% to $690.57 a share in early trade
U.S. electric car maker Tesla sold about 78,000 electric vehicles made in China in June, up 142% from the 32,165 sold in May and a year-over-year increase, preliminary estimates released by the China Passenger Car Association (CPCA) showed today. The former grew by 135%. According to its internal production memo, Tesla aims to produce more than 71,000 vehicles at its Shanghai plant in June.
Microsoft (MSFT-US) rose 0.20% to $263.38 a share in early trade
The UK’s Competition and Markets Authority (CMA) today launched an investigation into Microsoft’s acquisition of video game publisher Activision Blizzard (ATVI-US). The authority said its investigation would “consider whether the deal would harm competition and lead to worse outcomes for consumers, such as higher prices, lower quality or fewer choices.”
The CMA has set a September 1 deadline for its preliminary decision. The regulator is looking for feedback from interested third parties, and the consultation will continue until July 20, 2022.
DoorDash (DASH-US) fell 8.52% to $68.52 a share in early trade
Amazon (AMZN-US) on Wednesday agreed to take a 2% stake in Just Eat Takeaway.com’s troubled U.S. food delivery platform Grubhub, which will offer its own Prime members a year of Grubhub food delivery. The news greatly affected the shares of DoorDash and Uber (UBER-US), which are also delivery services, and fell 7.5% and 3.1% respectively before the market.
Today’s key economic data:
- U.S. June Markit services PMI final value at 52.7, expected 51.6, the previous value of 51.6
- The final value of the U.S. Markit Composite PMI in June was 52.3, expected to be 51.2, and the previous value of 51.2
- US June ISM non-manufacturing index is expected to be 54.3, the previous value of 55.9
- U.S. JOLTs job openings expected to be 11 million in May, compared to 11.4 million previously
Wall Street Analysis:
Strategists at Mizuho Securities, led by Peter McCallum, wrote in a note that the outlook for risk assets remains shaky and more clarity is needed to address the timing of the peak of hawkish sentiment, as well as the U.S. economic landing.
Citi analyst Saumesh Dutta said that the minutes of the Federal Market Committee (FOMC) meeting released today will be the focus of the market, a glimpse of whether the Fed will raise interest rates more than two yards, and the impact of monetary policy on economic growth concerns.