Overnight US stocks | The probability of the Fed's interest rate hike in October rose to 69.7%, and the three major indices fell, SK Hynix (SKHY.US) fell more than 3%
The Zhitong Finance App learned that on Wednesday, the US PMI data for September was strong, and investors are worried that the Federal Reserve may raise interest rates further. According to the CME “Federal Reserve Watch”, the probability that the Federal Reserve will keep interest rates unchanged at 3.75%-4.00% in October is 30.3%, and the probability of raising interest rates by 25 basis points is 69.7%. The probability that the Federal Reserve will keep interest rates unchanged at 3.75%-4.00% until December is 6.5%, the probability of a cumulative 25 basis point rate hike is 38.7%, and the probability of a cumulative 50 basis point rate hike is 54.8%.
US Treasury yields soared due to inflation concerns, and the 10-year Treasury yield hit 5.135%, the highest level since July 2007, and the biggest one-day increase since April 7, 2025. The 2-year Treasury yield hit its highest level since May 2024, at 4.947%.
[US Stocks] At the close, the Dow Jones index fell 351.27 points, or 0.68%, to 51512.42 points; the S&P 500 index fell 58.25 points, or 0.75%, to 7706.39 points; the Nasdaq Composite Index fell 308.24 points, or 1.13%, to 26936.04 points. SK Hynix (SKHY.US) fell more than 3%, Meta (META.US) rose 1%, and Amazon (AMZN.US) fell 2%. The Nasdaq China Golden Dragon Index closed down 1.44%, while Alibaba (BABA.US) fell 4.7%.
[European stocks] The German DAX30 index fell 188.16 points, or 0.73%, to 25411.85 points; the UK FTSE 100 index rose 1.92 points, or 0.02%, to 10710.25 points; the French CAC40 index fell 31.50 points, or 0.39%, to 8123.41 points; the European Stoxx 50 index fell 23.87 points, or 0.38%, to 6300.85 points; Spain's IBEX35 index fell 160.47 points, or 0.81%, to be reported 19631.33 points; Italy's FTSE MIB index fell 79.33 points, or 0.15%, to 52016.50 points.
[Asian Stock Market] Korea Composite Index rose 0.9%, India's Mumbai 30 Index rose 0.4%
[US Dollar Index] The US dollar index, which measures the US dollar against six major currencies, rose 0.49% on the same day and closed at 101.096 at the end of the foreign exchange market. As of the end of the exchange market in New York, 1 euro was worth 1.1387 US dollars, lower than 1.1442 US dollars on the previous trading day; 1 pound was worth 1.3243 US dollars, lower than 1.3335 US dollars on the previous trading day. 1 US dollar was worth 158.27 yen, up from 157.50 yen on the previous trading day; 1 US dollar was worth 0.8244 Swiss franc, higher than 0.8212 Swiss franc on the previous trading day; 1 US dollar was worth 1.4097 Canadian dollars, higher than 1.4068 Canadian dollars on the previous trading day; 1 US dollar was worth 9.9169 SEK, up from 9.8487 on the previous trading day.
[Cryptocurrency] Bitcoin fell below the 85,000 US dollar mark, as of the press report of 84,609; Ethereum fell more than 2% to 2,690 US dollars.
[Crude oil] Light crude oil futures for November delivery on the New York Mercantile Exchange rose $1.64, or 1.81%, to close at $92.16 a barrel; London Brent crude oil futures for November delivery rose $3.83, or 3.86%, to close at $103.08 a barrel.
[Precious Metals] Spot gold reported $4286.81 per ounce; spot silver reported $64.45 per ounce.
[Macro News]
It is difficult to resolve the financial pressure by questioning the US market for expanding the treasury repurchase program. The US Treasury Department said it will repurchase up to 6 billion US dollars of longer-term government bonds on Thursday. This is the first such operation since Treasury Secretary Bezent expanded the repurchase plan to curb the recent rise in borrowing costs. The maximum size of this buyback is three times the $2 billion initially announced to investors in early August. The original plan was cancelled in an unexpected announcement on August 19, when the Ministry of Finance said it would “at least double” the scale of such operations. After the announcement, 20-year to 30-year US Treasury bonds, which were the target for Thursday's repurchase, continued to decline. The yield on 30-year US bonds once rose to 5.38% intraday, close to the high of about 5.40% earlier this month, and the highest level since 2007. Faced with criticism from the outside world that the move was tantamount to market intervention and could not solve fundamental financial challenges, Bezent once defended expanding the scale of treasury bond repurchases, saying that the action was because he believed that market prices were “deviating” from the equilibrium level. The International Finance Association (IIF) warned on Wednesday that trying to solve potential debt dynamics through “financial engineering” means, and that intervention measures such as purchasing securities in the secondary market “may bring temporary relief, but they cannot address the structural factors driving debt growth.”
Business activity in the US rose to its highest level in more than five years, and inflationary pressure intensified. Driven by a surge in new orders, business activity in the US accelerated to its highest level in more than five years in September; however, strong demand also put pressure on the supply chain and boosted prices. S&P Global said on Wednesday that the initial US composite PMI for September rose to 58.4, the highest level since July 2021, up from 56.0 in August. This rise in PMI reflects strong growth in both services and manufacturing. S&P Global said the PMI data is consistent with the US economy growing at an annualized rate of about 5%. The agency also pointed out that the sharp increase in unfulfilled orders and supply chain delays “indicates insufficient operating capacity and drives further price increases.” Chris Williamson, chief business economist at S&P Global Market Intelligence, said: “Currently, business activity in manufacturing and services is clearly very strong. However, if the impact of the pandemic period is excluded, this increase has been accompanied by one of the most serious supply chain bottlenecks in the nearly 20-year survey history.” Supply restrictions mainly stem from the war between the US and Israel against Iran, which has now entered its seventh month.
Hassett criticized recent remarks by Federal Reserve officials supporting interest rate hikes and calling for the restoration of “independence.” US White House National Economic Council Director Hassett on Wednesday criticized recent US Federal Reserve officials supporting further interest rate hikes, saying it is worrying that the Fed continues to tighten its policy when the core inflation rate is close to 2%. Hassett said, “Why should interest rates be raised,” and questioned recent statements in support of more interest rate hikes made by some officials not appointed by Trump. Hassett said that Federal Reserve Chairman Walsh is managing a “highly politicized Federal Reserve” and that restoring the independence of the Federal Reserve is an important task facing it. Hassett also criticized that some senior Federal Reserve officials will continue to serve in the Federal Reserve even if they leave their original leadership positions. He named Powell and Barr, believing that this situation is different from past practices after changes in the Federal Reserve leadership. Recently, several Federal Reserve officials have sent hawkish signals. Barr said further rate hikes may be needed to push inflation back to the 2% target; Collins and Mussalem also expressed support for further rate hikes. According to the Federal Reserve's latest economic forecast, 16 officials expect to raise interest rates at least once this year.
[Individual Stock News]
Report: Taiwan Semiconductor Manufacturing (TSM.US) foundry prices are determined to increase by another 3% to 6%. According to reports, TSMC's foundry prices are set to rise again. Supply chain sources revealed that the 8-inch plant's capacity utilization rate exceeds 100%, and the order visibility for TSMC, which is fully loaded with processes below 45 nm, has reached 2030. It has been determined that starting January 2027, the Wafer Out price will be adjusted according to different manufacturing processes, with an increase of about 3-6%. According to reports, among them, the price increase for advanced manufacturing processes is high, while mature and special processes are individually negotiated according to the product, operating rate, and customer conditions, while the US factory in Arizona reflects high manufacturing costs, and OEM prices remain high. TSMC, on the other hand, did not respond to market rumors.
Microsoft President: AI security cannot rely on just a few model companies. Microsoft (MSFT.US) President Brad Smith said that Microsoft supports the deployment of an independent security assessment agency for artificial intelligence to promote the development of AI security. He said that AI security cannot rely on just one or two model companies. Although model companies such as OpenAI and Anthropic are important, software companies responsible for controlling AI agents and monitoring their behavior are just as important. Smith said that Microsoft has participated in AI security assessments through a security committee jointly established with partner OpenAI, and supports the establishment of manual shutdown mechanisms for advanced AI systems. He believes that AI security requires the establishment of multiple layers of protection, and that key controls should not be concentrated in just one place. Furthermore, Smith said that Microsoft is still planning to advance the previous plan to use 200 megawatts of computing power in the UAE AI data center, and believes that the present is still the right time to invest in the Middle East. Regarding Microsoft's goal of achieving negative carbon emissions by 2030, he said the company may need to adjust the path previously set.