US market on Wed (22 Mar) traded directionlessly until 2:00pm when the FOMC meeting was over with the press conference by Mr Powell, hot on the heels.
When the 0.25% interest hike was confirmed, market “reacted positively” initially.
It was afterall the much anticipated 0.25% and not the much feared 0.5%.
The “euphoria” proved to be short-lived as the press conference pressed on with Mr Powell further confirming that there would be no let down from the central bank in their fight to bring inflation down.
Personally I think, it is commendable that the Fed Reserves provides a clear direction of where they are heading without being ambiguous.
Doing so minimizes “speculations” of any sorts to be postulated by Wall Street to smoke-screen and “fool” the general public. Agree ?
By The Time Market Called It A Day :
DJIA : -1.63% (-530.49 to 32,030.11).
S&P 500 : -1.65% (-65.90 to 3,936.97). Worst performing index of the three.
Nasdaq : -1.60% (-190.15 to 11,669.96).
Respective Index’s Moving Average
Under such dire market conditions, it is beneficial to look at each composite index’s Moving Average.
13 Mar MA vs 22 Mar MA
Were you as surprised as I am with the respective Index’s moving averages ?
Dow Jones moving average - no significant change; index is still languishing below its 200-day, 50-day and 20-day moving averages.
S&P 500 index is met with resistance at its 200-day ma. Should the index closed higher by Thu evening, it just might end above its 200-day ma for the first time in a long time.
Nasdaq index surprised me by rising above its respective 200-day, 50-day and even 20-day ma. Must’ve been Wall Street’s returning focus on all technical stocks.
What Strategy To Adopt, Approaching 2nd Last Trading Day ?
Looking at US pre-market indicators, the three index looks like its ready to stage a recovery of sort.
Still too early to conclude because the index’s futures continuous to shift up, down, sideways until market opens to trade.
22 Mar 2023 - Latest interest hike
With the latest interest hike signed, sealed and delivered by The Fed, market now have “5 weeks” of breathing space before the Fed convenes for the next FOMC meeting in May 2023.
With attention seemingly turning back to Tech stocks - in particular Semiconductors, stock prices of $NVIDIA Corp(NVDA)$ and $Advanced Micro Devices(AMD)$ have been edging steadily upwards at least for past 5 days.
Most important I think is stay away from Bank stocks for the time being. Why ?
Gestation After Interest Hike
As with every interest hike, the bank stocks will need a bit of time to find its footing again.
Only this time, the time & effort needed will definitely be longer than the usual given that the latest bank-run turmoil is far from over.
With the latest interest hike, no one knows for sure how this will impact the smaller & medium size US regional banks ?
Don’t just take my words for it, $Wells Fargo(WFC)$ analyst Michael Schumacher seems to think along the same vein as well (see below !).
Turbulence Ahead in US, Europe, Hong Kong or Asean Market ?
Have you been observing the US market from Mon (20 Mar 2023); immediately after Sunday Credit Suisse rescue by $UBS Group AG(UBS)$ ?
Did you notice that both US Treasury Dept and The Fed have been trying to calm the market publicly ?
They have declared that US banking sector is stable, well-capitalized and the US govt will not hesitate to take further action to bring about stability.
There is really more that meets the eye. $First Republic Bank(FRC)$ is still in a state of flux (see below).
I think its share price will tumble when market opens on today (Thu - 23 Mar).
Will Europe market be rocked to the core tomorrow, as well ?
Reason being, Swiss Central Bank has also just raised interest rate by +0.5%; in tandem with Europe Central Bank (ECB) most recent interest hike of the same 0.5% (see below).
Will all the “tough stances” taken by respective EU or US central banks results in a “follow the sun” snowball effect affecting Hong Kong and ASEAN when trading resumes tomorrow Fri, 24 Mar 2023 ? Hmm….
Do you think US Banking sector is still far from stable ?
Do you think it is prudent to stay away from Bank stocks for the time being ?
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