A Week In Review: Rebounds And Rotations Across Global Finance

Hong Kong Stock Market

After fluctuating repeatedly last week, the Hong Kong stock market has risen, with the index breaking through the key resistance level of 17,500 points in the past two weeks, and the trend structure is turning bullish. The Federal Reserve has kept interest rates unchanged, and with the rapid decline in US bond yields, the market expects that the Fed's rate hike cycle is basically over. US stocks have rebounded continuously, leading to volatility in the stock markets of both China and Hong Kong. In the overall stable market environment, the Hong Kong stock market has gradually started to invest in some sectors with positive expectations, and the market sentiment is stabilizing. Looking ahead to next week, there is a high probability that the index will continue to fluctuate and challenge the resistance zone of 17,700-18,000 points. The market will mainly observe whether there is sector rotation and the sustainability of sectors and individual stocks. It will enter a relatively stable and steady structure, and there will still be certain trading opportunities in the market.

US Stock Market

Although experiencing the 'worst October market in five years,' the US stock market has rarely seen a strong rebound last week. Data shows that hedge funds have been increasing their short positions in individual stocks for the 11th consecutive week, mainly due to the market's increasingly pessimistic outlook on US economic growth prospects. The Wall Street fear index, VIX, has remained above 20 for the second consecutive week. However, with the announcement of the Federal Reserve to continue pausing rate hikes in November last week, the market clearly breathed a sigh of relief, and growth sectors such as the chip sector were able to catch their breath. It is expected that the main risk factors next week will still be the impact of earnings season on the index market.

Fixed Income Market

The Federal Reserve implemented a dovish pause in interest rates last week, while economic data pushed the bond market to rebound. Specifically, the US ADP employment report recorded an increase of 113,000 jobs in October, far below market expectations, and has been below market expectations for three consecutive months. The growth rate of October wages has also shown a significant decline. The data indicates that the expectation of a cooling job market in the United States is gradually being realized, and the deteriorating economic outlook combined with the dovish signals from the Federal Reserve has led the market to anticipate the end of the rate hike cycle. On the other hand, the US Treasury announced a reduction in Q4 debt issuance, and the lower supply growth expectations have significantly warmed the long bond market.

Author: Eddid Securities and Futures Research Department

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