U.S. stocks fell Wednesday, 11th May 2022, as data showed that U.S. inflation will remain high for quite some time, fueling market concerns that the Federal Reserve may be forced to tighten policy aggressively and cause the economy to fall into recession.
The dollar’s remarks from Atlanta Fed President Bostic also didn’t help, as the official said he is open to “more action” on interest rates if inflation remains high.
The S&P 500 erased gains and fell to its lowest point since March 2021, the Nasdaq 100 fell about 3%, and giants such as Tesla and Apple were hit hard; small stocks fell, rising nearly 2% at one point during the day.
The U.S. Treasury yield curve flattened, with the gap between the 2-year and 10-year treasury yields narrowing by 9 basis points. Based on the federal funds futures market, the market seemed to agree that a 75 basis point rate hike was unlikely.
But they did increase their bets that the Fed will raise rates by 50 basis points in September, and will also raise rates by 50 basis points each in June and July.
While the year-over-year rise in the consumer price index cooled slightly from March, hinting at the peak economists expected, the higher-than-expected year-over-year rise made the details of the report present a more troubling picture.
The acceleration in service sector costs and the still-high rate of appreciation for most goods underscored the stubbornness and breadth of price pressures.
By the close of trading, the S&P 500 was down 1.7% at 3935.18, the Dow Jones Industrial Average was down 1% at 31,834.11, the Nasdaq Composite was down 3.2% at 11,364.24, and the Nasdaq 100 was down 3.1% at 11,967.56.
(Dow 30, 1-hour chart)
The Dow is concerned about the 32455-line today. If the Dow runs stably below the 32455-line, it will pay attention to the support strength of the 31661 and 31000 positions. If the Dow rebounds above the 32455-line, it will pay attention to the suppression strength of the 32781 and 33233 positions.
Hong Kong Stocks
Overnight, U.S. stocks closed sharply lower, while Hong Kong stocks took a lower opening this morning, the Hang Seng Index (HSI) opened 1.35% lower, the Hang Seng China Enterprises Index (HSCEI) fell 2.52%.
On the market, technology stocks led the decline, with new energy auto stocks leading the decline and pharmaceutical stocks were mixed.
Overnight, U.S. stocks plunged, dragging down Hong Kong technology stocks collectively this morning.
Bilibili Inc. (9626.HK) fell nearly 7%, Zhihu Inc. (2390.HK) fell more than 5%, JD.com, Inc. (9618.HK), Baidu, Inc. (9888.HK), Alibaba Group Holding Limited (9988.HK) fell more than 4%, Meituan (3690.HK) fell nearly 3%, Xiaomi Corporation (1810.HK) fell more than 1%, Tencent Holdings Limited (0700.HK) fell slightly by 0.5%.
The 2021 annual reports and the first quarter reports of Hong Kong listed companies is basically over. From the perspective of this year’s first quarter reports, the resource goods industry continues to be booming.
The financial sector is under pressure in the capital market adjustment, as the industrial and healthcare sectors’ quarterly performance growth is also relatively weak.
The market’s forecast for 2022 full-year earnings growth was lowered to 19% from 23.4% at the beginning of the year, reflecting investors’ pessimistic expectations.
However, the upstream energy and transportation sectors in the pro-cycle earnings forecast was revised upward from the beginning of the year, while the defensive sectors benefited from the economic policy bottoming out is expected to be positive.
In addition, the “lack of core” situation is more severe under the disturbance of the epidemic, which further boots the high boom in the semiconductor industry.
(HK50, 1-hour chart)
HK50 focuses on the 19517-line today. If HK50 can run stably above the 19517-line, then pay attention to the suppression of the 20467 and 21450 positions. If the HK50 runs below the 19517-line, then pay attention to the support of the 18606-line.
FTSE China A50 Index
(FTSE China A50, 1-hour chart)
FTSE China A50 pays attention to the 13157-line today. If the A50 runs steadily below the 13157-line, then pay attention to the support strength of the two positions of 12733 and 12328. If the A50 runs above the 13157-line, it will open up further upward space. At that time, pay attention to the suppression strength of the 13496-line.
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