On Monday, all three major US stocks closed higher, with the Dow and S&P 500 reaching new all-time highs. Following the Fed’s 50 basis point rate cut last week, the market is now focused on comments from several Fed officials.
Atlanta Fed President Raphael Bostic mentioned that a significant rate cut to start the Fed’s easing cycle brings rates closer to neutral levels, but officials should avoid committing to maintaining an aggressive rate-cutting stance.
Minneapolis Federal Reserve President Neel Kashkari wrote that he supports two more rate cuts this year, each of 25 basis points. Although Kashkari does not have a vote on the FOMC this year, he remains involved in monetary policy discussions.
After the Fed’s 50 basis point rate cut last week, while small-cap stocks, which typically benefit from lower borrowing costs, saw inflows, hedge funds unexpectedly poured into large tech stocks.
According to Goldman Sachs, hedge funds bought US tech, media, and telecom stocks at the fastest pace in four months leading up to September 20.
Boosted by multiple positive factors, the Mainland and Hong Kong stock markets saw a broad rally today. According to CCTV News, China’s central bank announced on Tuesday that it will cut the reserve requirement ratio (RRR) by 50 basis points, injecting around 1 trillion yuan in long-term liquidity into the financial market. The central bank also said it would lower existing mortgage rates and standardize the minimum down payment ratios, expecting an average reduction of about 50 basis points.
US Stocks
Fundamental Analysis:
Most large-cap tech stocks rose, with Tesla up nearly 5%, Intel up more than 3%, Amazon up over 1%, while Nvidia and Meta posted small gains. Qualcomm and Google fell over 1%. Solar energy, utilities, and industrial metals sectors gained, with First Solar up more than 3%, Southern Copper rising over 2%, and Rio Tinto and BHP gaining more than 1%.
Precious metals and consumer electronics sectors declined, with Allied Technology dropping over 11%, Gold Mining stocks down 6%, Silvercorp falling more than 3%, and Hecla Mining and Coeur Mining both down more than 2%. Trump Media & Technology Group slumped 10%, hitting new lows.
Most Chinese stocks were up, with the Nasdaq Golden Dragon China Index climbing 1.36%. JD.com surged more than 4%, with Tencent Music and Li Auto up more than 3%. Futu Holdings, Pinduoduo, Baidu, Alibaba, and NetEase gained over 2%, while iQiyi, Weibo, and Vipshop were up more than 1%. Nio, Full Truck Alliance, and Bilibili posted small gains. MINISO Group tumbled more than 16%, while Xpeng Motors edged lower.
Technical Analysis:
Market Trends:
- Dow: Up 61.29 points, or 0.15%, to 42,124.65
- Nasdaq: Up 25.95 points, or 0.14%, to 17,974.27
- S&P 500: Up 16.02 points, or 0.28%, to 5,718.57
Hong Kong Stock Market
Fundamental Analysis:
Thanks to the RRR cut, the reduction of mortgage rates, and other favorable factors, all three major Hong Kong indexes rose collectively.
In the market, tech stocks surged, with JD.com leading the way up over 9% and Alibaba up nearly 4%. Financial stocks, including Chinese brokerage firms, insurers, and banks, also rallied, with China Merchants Bank jumping more than 9%.
Mainland real estate stocks also saw strong gains, with R&F Properties surging over 13%. Apple-related stocks were also active, with Sunny Optical Technology rising over 7%, while automakers like Nio climbed more than 8%.
Chinese brokerage stocks were among the top gainers, with Citic Securities up more than 8%. In related news, the People’s Bank of China (PBOC) announced the creation of a swap facility for securities, fund, and insurance companies to support liquidity.
The PBOC stated that the facility’s initial scale would be 500 billion yuan, and the funds obtained can only be used for investing in the stock market.
MINISO Group plunged more than 26%. On September 23, Yonghui Superstores announced that a shareholder planned to transfer a 29.4% stake in the company to MINISO’s controlling entity, Juncai International, for approximately 6.27 billion yuan. MINISO and Yonghui Superstores are teaming up to transition to a high-quality retail model.
Technical Analysis:
Market Trends:
- Hang Seng Index: Up 3.28%, to 18,845.37
- Hang Seng Tech Index: Up 4.19%, to 3,853.37
- Hang Seng China Enterprises Index: Up 3.94%, to 6,641.06
FTSE China A50 Index
Fundamental Analysis:
Mainland China’s stock markets opened higher with increased volume. By midday, total market turnover had reached 5.217 trillion yuan, 1.549 trillion yuan more than the previous session. More than 4,900 stocks were up.
Sector-wise, steel, diversified financials, and energy metals led the gains, while Huawei-related and precious metals stocks lagged.
On the board, steel stocks surged in early trading, with China South Steel, Lingyuan Iron & Steel, Anyang Steel, Bayi Iron & Steel, and Xining Special Steel hitting the daily limit.
Diversified financial stocks also posted gains, with Tianfeng Securities, Compass, Yinzhijie, Pacific, Haide Holdings, China National Aviation Finance, Cofco Capital, and Xiangyi Rongtong all hitting the daily limit.
State-owned enterprise (SOE) reform stocks remained active, with Datang Telecom hitting the daily limit for the sixth consecutive session, and other SOE stocks such as Dongjiang Environmental, Tianfeng Securities, Zhongcheng Shares, and Shanghai Jiuyao also hitting the limit.
Lithium mining stocks rebounded, with Shengxin Lithium Energy, Defang Nano, and Weiling Shares all reaching the daily limit. Huawei supply chain stocks pulled back, with Shenzhen Huaqiang hitting the daily limit, followed by declines in Changshan Beiming and Tuwei Information.
Meanwhile, several high-flying stocks saw sharp corrections, with Baobian Electric falling by the daily limit, and Mogao Corporation and Yinbaoshanxin leading the declines.
Technical Analysis:
Market Trends:
- Shanghai Composite: Up 2.38%, to 2,814.30
- Shenzhen Component: Up 2.58%, to 8,291.61
- ChiNext Index: Up 3.45%, to 1,583.30
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