Category: Economics and Banking

Global stocks rallied on Friday for a second day on hopes cooler U.S. inflation would lead to less aggressive interest rate hikes by the Federal Reserve, an outlook that pushed the dollar to its biggest two-day drop in 13 years.

On Wall Street, stocks rose to add to the prior day’s biggest daily percentage gains for the S&P 500 and Nasdaq in more than 2-1/2 years after year-over-year inflation in October fell below 8% for the first time in eight months.

“We got a potential view that the Fed may not need to get as horrible as we thought over the last couple of weeks,” Marvin Loh, senior global macro strategist at State Street in Boston, said about the market’s exuberance. “Risk could be stabilizing here.” The Fed has no choice but to press on, but if inflation is no longer rising, that indicates the end of more extensive tightening may be near, Loh said.

The Dow Jones Industrial Average rose 0.1%, the S&P 500 gained 0.92% and the Nasdaq Composite advanced 1.88%. Energy stocks rose more than 3%, buoyed by rising oil prices as China eased some of its Covid-19 restrictions, stoking hopes for a jump in demand.

The banks rose, with ANZ up 1.48%, CBA up 1.7%, NAB up 1.15% and Westpac up 1.99%. Macquarie was up 5.6%. So old world financials did well.

Where as in Crypto Pain land. Sam Bankman-Fried’s digital-asset empire filed for Chapter 11 bankruptcy, capping the downfall of one of crypto’s wealthiest and most influential moguls and his collection of high-flying ventures including exchanges and a massive trading operation.

At his peak, crypto mogul Sam Bankman-Fried was worth $26 billion. At the start of this week, he still had $16 billion. Following the collapse of his crypto exchange FTX and his Alameda Research trading house, his assets in the Bahamas have been frozen by the authorities, he’s being investigated by the US Securities and Exchange Commission for potential violations of securities rules, and regulators in Cyprus are poised to suspend his license to operate in Europe. By Thursday, the Bloomberg Billionaires Index was valuing FTX’s US business at $1, down from $8 billion in January. That’s not a typo. One dollar.

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The US Markets took a dive on Wednesday as the red wave of expected Republican gains in the midterm elections appeared more a slight pink. The news from the crypto sector was bad as Binance is seen increasingly unlikely to follow through on its takeover of FTX.com, and tomorrow we get the upcoming inflation data that will provide clues about the severity of future interest rate hikes.

Whilst Republicans were still favored to win control of the House of Representatives, key races were too close to call, with a better-than-expected showing by Democrats diminishing the prospect of a so-called red wave of Republican gains.

Major indexes added to declines as Treasury yields climbed further after a poor auction of 10-year notes by the U.S. Treasury. Treasury yields reversed and fell later in the day. The 10-year was last at 4.099, while the 2-year was at 4.5816. Traders are split over whether the Fed will raise rates by 50 basis points or 75 basis points in December.

In tech, Meta Platforms bucked the trend lower to rise more than 5% after the social media company detailed plans to cut more than 11,000 jobs or 13% of its workforce. The cost-cutting was welcomed by Wall Street amid frustrations about the company’s ongoing plan to invest in the metaverse.

Binance signed a non-binding agreement on Tuesday to buy FTX’s non-U.S. unit to help cover a “liquidity crunch” at the rival exchange, but the deal was subject to further due diligence.

“As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com,” Binance said in a statement.

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