Weekly News 2022/09/05-2022/09/09

 U.S. stocks closed higher on Friday, the Dow rose 377.19 points, or 1.19%, to 32151.71; the Nasdaq rose 250.18 points, or 2.11%, to 12112.31; the S&P 500 rose 61.18 points, or 1.53%, to 4067.36 point. This week, the Dow rose 2.66%, the S&P 500 rose 3.65%, and the Nasdaq rose 4.14%. U.S. Treasury yields climbed, with the 2-year Treasury yield hitting a 15-year high. Markets are still weighing the latest comments from Federal Reserve Chairman Jerome Powell on U.S. inflation. Fed officials continued to stress that inflation was too high, suggesting aggressive rate hikes in the future.

All three major stock indexes posted gains for the week. But Bank of America strategists pointed out that investors are fleeing U.S. stocks, which are facing various risks, including the risk of a recession. According to EPFR Global data cited by JPMorgan (119.17, 0.57, 0.48%), U.S. equity funds saw outflows of $10.9 billion in the week ended Sept. 7, the largest outflow in 11 weeks, with funds from tech stocks The most serious outflow.

Sebastien Galy, senior macro strategist, said: “The market is very concerned about the actions of the European Central Bank and the Federal Reserve as they try to control inflation. This will eventually change and investment horizons will be extended significantly. But for now, the market has good reason. No. Inflation will undermine consumer confidence, and excessive tightening could tip Europe and the U.S. into recession.”

Next week, the U.S. Labor Department will release its consumer price index (CPI) report for August, which is now expected to slow slightly to 8.1% year-on-year, but this level is still more than four times higher than the central banks 2% target.

SpaceX CEO Elon Musk said on Thursday that the company has been in talks with Apple (NASDAQ: AAPL) about using the “Starlink” connection for its new iPhone satellite service. Musk tweeted that the two sides had had “promising conversations” and praised Apple's iPhone team for being “super smart.” Just a day ago, Apple officially announced the launch of a satellite communication feature that will allow iPhone 14 users to send and receive messages and call for emergency help in areas without mobile phone coverage. Satellite communications company Globalstar is its most important partner in the service.

TSMC (NYSE: TSM) disclosed its August revenue report. The month's revenue increased by 58.7% year-on-year to TWD 218.13 billion, an increase of 16.8% month-on-month, and revenue once again hit a record high. TSMC estimates that the revenue in the third quarter will reach 19.8-20.6 billion US dollars, which is equivalent to an increase of 10%-14.5% from the previous quarter, and the gross profit margin is estimated to be 57.5%-59.5%. It has the opportunity to surpass the second quarter.

Bilibili (NASDAQ: BILI) released its second-quarter earnings on Thursday. The data shows that the revenue in the second quarter was 4.9 billion yuan, an increase of 9% year-on-year, and the market expected 4.905 billion yuan. Chen Rui, chairman and CEO said that in the face of the challenges brought by the macro environment and the epidemic in the second quarter, we adopted a steady growth strategy, continued to focus on reducing costs and increasing efficiency, and achieved high-quality user growth. In the second quarter, under the severe macro environment, the advertising revenue still achieved a year-on-year growth of 10% against the market trend.

The cryptocurrency rallied with risk assets on Friday as bitcoin prices recovered above $20,000 as the dollar retreated from 20-year highs. Bitcoin, the world‘s largest cryptocurrency by market value, rose 9 percent to above $21,000 after near a year low before rising more than 3 percent this week, pushing the total cryptocurrency market value back above $1 trillion. Bitcoin’s rally was largely buoyed by a weaker U.S. dollar index, which has retreated from 20-year highs hit earlier in the week. A fall in U.S. Treasury yields and a larger-than-expected rate hike by the European Central Bank reversed the dollar's gains.

Other cryptocurrencies also recovered, Ether the second-largest cryptocurrency by market capitalization, jumping 5.4% to above $1,700, hitting a three-week high. Ethereum has outperformed other cryptocurrencies over the past month due to the imminent move to proof-of-stake (PoS). After switching to proof-of-stake (PoS), the power consumption of Ethereum can be greatly reduced and the transaction speed can be greatly improved.

However, while the crypto market has temporarily rebounded, investors remain concerned that the short-term rally will quickly reverse.

Federal Reserve Chairman Jerome Powell said on Thursday that the bank will continue to tighten monetary policy to fight inflation, raising traders' expectations for a 0.75% rate hike this month. Cryptocurrencies have fallen sharply this year largely due to higher interest rates as the Federal Reserve pulled out of its two-year ultra-easy monetary policy. At the same time, most central banks are also raising interest rates, and the rebound of major cryptocurrencies may be limited in the short term.

On Friday, spot gold rose 1.05% to $1,726.50 an ounce; the main COMEX gold futures contract rose 1.00% to $1,737.4 an ounce. Gold prices bottomed out this week, the European Central Bank raised interest rates sharply to put pressure on the dollar, non-U.S. varieties including gold rebounded, and fears of recession in the European economy and the United Kingdom intensified, coupled with the European energy crisis, these factors supported the safe-haven gold. However, the hawkish tone of Fed officials and expectations of Fed rate hikes limited the recovery in gold prices.

“At current levels, gold appears to have bottomed out in the short term, but the strength of the labor market will continue to dominate the Fed's view of economic fundamentals.” said Michael Langford, director of consultancy AirGuide.

U.S. jobless claims fell for a fourth straight week in the week ended Sept 3rd, data showed on Thursday, underscoring the strength of the labor market and bolstering expectations for continued aggressive interest rate hikes by the Federal Reserve.

Federal Reserve Chairman Jerome Powell said the central bank is “firmly committed” to fighting inflation and remains on track to continue the policy path it has opened and control price spikes without paying “very high social costs”.

Looking ahead to next week, the market will usher in a series of heavy data. The U.S. CPI powder, which is closely watched by the market, debuted in August. In addition, data such as retail sales in the United States are also worthy of attention. Investors should also pay attention to fundamental news such as the global trade situation, the epidemic situation, and the European energy crisis.

On Friday, spot gold rose 1.05% to $1,726.50 an ounce; the main COMEX gold futures contract rose 1.00% to $1,737.4 an ounce. Gold prices bottomed out this week, the European Central Bank raised interest rates sharply to put pressure on the dollar, non-U.S. varieties including gold rebounded, and fears of recession in the European economy and the United Kingdom intensified, coupled with the European energy crisis, these factors supported the safe-haven gold. However, the hawkish tone of Fed officials and expectations of Fed rate hikes limited the recovery in gold prices.

“At current levels, gold appears to have bottomed out in the short term, but the strength of the labor market will continue to dominate the Fed's view of economic fundamentals.” said Michael Langford, director of consultancy AirGuide.

U.S. jobless claims fell for a fourth straight week in the week ended Sept 3rd, data showed on Thursday, underscoring the strength of the labor market and bolstering expectations for continued aggressive interest rate hikes by the Federal Reserve.

Federal Reserve Chairman Jerome Powell said the central bank is “firmly committed” to fighting inflation and remains on track to continue the policy path it has opened and control price spikes without paying “very high social costs”.

Looking ahead to next week, the market will usher in a series of heavy data. The U.S. CPI powder, which is closely watched by the market, debuted in August. In addition, data such as retail sales in the United States are also worthy of attention. Investors should also pay attention to fundamental news such as the global trade situation, the epidemic situation, and the European energy crisis.

This week, the U.S. dollar index fell after hitting a new high of 110.80 since mid-June 2002, and closed down again after a lapse of three weeks. At present, it has fallen by nearly 0.9% to around 108.61, showing that there is obvious resistance around the 110 integer. The Fed's policy meeting is approaching, and there is a need for adjustment in the market.

A strong U.S. economy is still creating jobs at a faster-than-consensus pace, the Fed has stepped up its fight against inflation by raising rates faster than most of its peers, and the dollar is likely to remain strong for longer, at least for the rest of the year.

EUR/USD has rebounded sharply after refreshing its low since early December 2002 to 0.9863 and is now up 1.35% at 1.0090. The European Central Bank raised interest rates this week by 75 basis points, the highest rate since 1999, and said it will continue to raise interest rates in the next few meetings.

British pound was up 0.84% at $1.1608, but hit a fresh intraday low of $1.1404 since 1985. The outlook for Britain's debt is worrying, with Bank of England policymakers failing to reinforce expectations of more aggressive interest rate hikes in testimony before the UK parliament's finance committee.

The dollar hit a new high of 144.986 against the yen since August 1998, and was set for a fourth straight week of gains. But as the dollar pulled back, the gains narrowed and were now up 1.31% at 140.090. The yen continued to underperform as markets bet that the Bank of Japan will continue to implement ultra-loose monetary policy.

OnePro Special Analyst

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