Alpha Trade: Speculations in stock and currency markets after the Fed meeting

[AlphaTrade]

Alpha Trade: Speculations in stock and currency markets after the Fed meeting

After the Federal Reserve meeting, Alpha Trade would like to talk about the conjectures about the stock market and some currency markets in the future. I use the word conjecture. After all, there are still many conditions for it to happen.

Alpha Trade believes that after the Federal Reserve meeting, interest rates remained at the recent high of 5.5%. From the post-meeting minutes and Powell’s speech, Alpha Trade unexpectedly found that the overall attitude of Federal Reserve officials remained relatively strong, although the dot plot shows , the Federal Reserve still maintains its willingness to cut interest rates in late 2024, but this willingness has not been expressed too strongly. The overall goal is still moving forward around the inflation target. Alpha Trade has reason to believe that inflation has not returned to the 2% target. The Federal Reserve's willingness to cut interest rates Not strong. In fact, the current strength of the U.S. dollar is understandable. The main reason is that the world's political situation has given the U.S. dollar opportunities. Recently, war situations have continued in Europe and the Mediterranean, and funds are willing to use the U.S. dollar as a safe haven. Secondly, in terms of macro-environmental funds, Europe and the Because the interest rate difference between the United States and Japan and China is so attractive, a large amount of money has poured into the foreign exchange market and stock market, driving up the European and American markets and driving the stock market higher. It can be said that it uses earnings to fight inflation.

For the future of the U.S. dollar, Alpha Trade cannot see any downward factors in the short term. In terms of strong market comparison, the U.S. economy is still in a healthy stage, and the single market determines that its resilience is better than the European market. There has always been a view that the EU market is too huge. Uneven, so when interest rates increase significantly, some relatively small countries will be unable to withstand the impact first and start to cut interest rates. Therefore, Alpha Trade is more convinced that Europe will cut interest rates before the United States, and then more hot money will flow in. The United States makes the market even more frenzied.

So, will the U.S. dollar be safe? Alpha Trade believes that we must first look at the U.S. stock market. At the current 40,000-point stage, will the market be interpreted as overheating? But we can think of it this way. Before inflation has not dropped much, stock market hedging funds will still be the first choice for investors, so even if Overheating, there are still not many reasons to be bearish in the short term, unless there is a very major negative political or military event; Alpha Trade believes that the second aspect depends on when the Japanese and Chinese markets are willing to make a fundamental increase in interest rates. , so that funds have the motivation to flow back to Asia (the opportunity is unlikely for the time being), otherwise the natural attribute of capital that likes to appreciate will not change in the short term.

Alpha Trade is more worried about the Hang Seng Index recently. The downturn of Chinese-funded companies has caused Hong Kong stocks to continue to fall, and is about to test the psychological barrier of 15,000-16,000. Alpha Trade is reminded of Soros and the financial crisis. If Chinese companies continue to cash out After leaving the market, Hong Kong stocks are testing the mark. Will international speculators pursue it again? I'm afraid this time will be different from 1997. In that year, in addition to the Hong Kong government, the central government also provided financial support to maintain the foreign exchange and stock markets. But if another crisis strikes this time, only the Hong Kong government may be left to fight. After all, the Chinese stock market It hasn't been much better recently, as financial power has been limited. If this is the case, will the linked exchange rate that has been maintained for decades be broken again? Although it is a bit of a conspiracy theory, it is not impossible. After all, Singapore is increasingly replacing Hong Kong. To be honest, Hong Kong's financial charm has declined a bit.