Rate Cut Sparks US Stock Surge, Chinese Assets Boom

On September 19th Eastern Time, the day after the Federal Reserve cut interest rates by 50 basis points, the U.S. stock market celebrated across the board, with the Dow Jones Industrial Average breaking through the 42,000-point threshold for the first time, setting a new historical closing high alongside the S&P.

Major technology stocks rose together, with Tesla surging over 7% to a closing high not seen in more than two months; Nvidia rose nearly 4%, and Apple rose over 3%.

The day after the Federal Reserve's rate cut, the U.S. stock market partied.

On September 19th Eastern Time, all three major U.S. stock indices rose.

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By the close, the Dow Jones had jumped 522.09 points, a 1.26% increase, to 42,025.19 points, closing above 42,000 points for the first time; the Nasdaq rose 440.68 points, a 2.51% increase, to 18,013.98 points; the S&P 500 index rose 95.38 points, a 1.70% increase, to 5,713.64 points, setting a new closing high.

Salman Ahmed, Head of Global Macro and Strategy Asset Allocation at Fidelity International, stated that the Federal Reserve's rate cut this time seems preemptive, with the accompanying dot plot and comments during the press conference emphasizing that the Fed will be more cautious in the pace and magnitude of its easing policies in the future.

In short, the 50 basis point rate cut appears somewhat hawkish.

However, there is no doubt that dovishness is the main theme of the FOMC, and any further weakening in the labor market will lead to larger and faster rate cuts, which the market has already understood.

Ahmed's team still believes that a soft landing is a very likely scenario for this year.

According to Wind Hong Kong News Agency, Citigroup expects the Federal Reserve to cut rates by 25 basis points in December, down from a previous forecast of a 50 basis point cut, while maintaining a forecast of a 125 basis point cut in 2024.

Bank of America Global Research believes that the Federal Reserve will cut rates by 75 basis points in the fourth quarter of 2024 and by 125 basis points in 2025, bringing the terminal rate to 2.75% to 3%.

JPMorgan Chase correctly predicted the Federal Reserve's 50 basis point rate cut this week, stating that another significant rate cut depends on whether the U.S. labor market weakens.

Michael Feroli, Chief U.S.

Economist at JPMorgan Chase, believes the Fed will cut rates by another 50 basis points in November, but he said his view depends on the results of the upcoming employment report.

On September 19th Eastern Time, major technology stocks rose together, with Tesla surging over 7% to a closing high not seen in more than two months; Nvidia rose nearly 4%, Meta, Apple rose over 3%, Netflix rose over 2%, and Intel, Microsoft, Google, and Amazon rose over 1%.

In terms of news, according to Wind, Apple's self-developed 5G modem (also known as the baseband) does not support millimeter wave technology in its first version.

Apple may continue to rely on its existing 5G chip supplier Qualcomm to provide 5G chips for iPhone models that support millimeter wave (including all U.S. versions of the iPhone 12 models and newer).

Amazon has launched an artificial intelligence (AI) assistant named Amelia for third-party sellers, dealing with issues such as account management, sales, and inventory data.

The European Union will warn Apple to open its iPhone operating system to competing technologies, or face hefty fines.

Insiders have revealed that regulators will announce that the Cupertino-based company must comply with strict new rules under the EU's new Digital Markets Act to make the operating system fully compatible with other technologies.

Chinese assets explode!

On September 19th Eastern Time, Chinese assets exploded!

The NASDAQ Golden Dragon China Index surged by more than 4%, performing brilliantly.

In terms of popular stocks, Miniso rose by more than 10%, XPeng Motors rose by more than 8%, NIO rose by more than 7%, JD.com and Bilibili rose by more than 6%, Tencent Music, Alibaba, and Vipin rose by more than 4%.