On Wednesday, the Federal Reserve announced a substantial rate cut of 50 basis points, but Chair Jerome Powell indicated there’s no rush to ease policy further. US stocks experienced a roller-coaster session, with the major indices rising before retreating, ultimately closing with slight losses.

At 2 a.m. Beijing time on Thursday, the Federal Reserve revealed its latest policy decision, cutting the federal funds rate by 50 basis points, lowering the target range to 4.75% – 5%. This marks the Fed’s first rate cut since March 2020.

In a subsequent press conference, Fed Chair Jerome Powell reiterated that the Fed remains fully focused on its dual mandate of controlling inflation and achieving full employment.

He emphasized, “Our economic forecasts are not plans or decisions; if the economy remains robust and inflation persists, policy adjustments could proceed more slowly. Monetary policy will be adjusted based on evolving economic conditions to better meet our objectives.”

According to the Fed’s median dot plot, cumulative rate cuts of 100 basis points are expected for 2024, with another 50-basis-point reduction projected following the 50-basis-point cut in September. The Fed also anticipates cutting rates by another 100 basis points in 2025, consistent with the rate cuts forecasted in June’s dot plot.

US Stocks

Fundamental Analysis: 

Most major tech stocks fell, with Intel down over 3%, Netflix dropping more than 2%, and Microsoft and Nvidia sliding over 1%. Tesla and Amazon saw slight declines, while Apple gained over 1%, and Google and Meta posted modest gains.

Precious metals led the declines, with Newmont Gold falling over 5%, Coeur Mining and Hecla Mining down more than 3%, and Century Aluminum and Harmony Gold dropping over 2%.

Chinese stocks listed in the US mostly declined, with the Nasdaq Golden Dragon China Index falling 0.86%. Nio plummeted over 7%, XPeng Motors dropped more than 4%, Li Auto fell nearly 3%, and Bilibili dropped over 2%.

Futu Holdings and Full Truck Alliance dipped more than 1%, while Baidu, Vipshop, NetEase, Tencent Music, Alibaba, and Pinduoduo also posted small losses. Weibo gained over 1%, and iQiyi saw a slight rise.

Technical Analysis: 

Market Trends: 

• Dow Jones: Down 103.08 points, or 0.25%, at 41,503.10
• Nasdaq: Down 54.76 points, or 0.31%, at 17,573.30
• S&P 500: Down 16.32 points, or 0.29%, at 5,618.26

Hong Kong Stock Market

Fundamental Analysis: 

Hong Kong stocks rallied across the board, with tech stocks leading the charge. Kuaishou soared over 6%, JD.com rose more than 5%, Alibaba and Meituan gained over 3%, and Tencent added 2%.

Mainland property stocks posted significant gains, with R&F Properties surging over 13%. Household appliance stocks also performed well, with Hisense Home Appliances climbing nearly 14%, and restaurant stocks saw strong gains, led by Jiumaojiu rising more than 12%.

However, gold stocks fell sharply, with Zhaojin Mining down over 3%. On Wednesday, the Fed’s 50-basis-point rate cut caused an overnight surge in gold prices, which then pulled back sharply, shedding nearly $50 after reaching record highs.

Fed Chair Powell noted that the Fed is not in a hurry to ease further and cautioned against seeing large rate cuts as the new norm.

Technical Analysis: 

Market Trends: 

• Hang Seng Index: Up 1.81%, closing at 17,978.83
• Hang Seng Tech Index: Up 3.05%, closing at 3,644.51
• China Enterprises Index: Up 1.87%, closing at 6,291.51

FTSE China A50 Index

Fundamental Analysis: 

Mainland China’s A-shares rose across the board in morning trading, with total half-day turnover across Shanghai, Shenzhen, and Beijing reaching ¥4.278 trillion, an increase of ¥1.333 trillion from the previous day. More than 4,800 stocks were up across the two main markets.

In terms of sectors, consumer staples such as liquor, dairy, and food processing were among the top gainers, while shipbuilding and insurance stocks were among the laggards.

Liquor stocks led the rally, with shares of Rock Group hitting the limit-up, alongside Emperor Wine and Spirits and Guizhou Maotai following suit. Food stocks also performed well, with Pinwo Foods, Huifa Foods, and Qiaqia Food all hitting the limit-up.

State-owned enterprise reforms remained active, with Baobian Electric nearing the daily limit and multiple stocks like Dalian Thermal, Datang Telecom, and Changcheng Electric also rising sharply.

The shipbuilding sector underperformed, with China Power and China Shipbuilding Corporation down more than 4%.

Technical Analysis: 

Market Trends: 

• Shanghai Composite Index: Up 0.59%, closing at 2,733.38
• Shenzhen Component Index: Up 1.25%, closing at 8,092.14
• ChiNext Index: Up 0.99%, closing at 1,548.63

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