Sino-Singapore Jingwei Client, March 4th (Song Yafen) In response to the new crown virus's risk to the US economic activities, the Federal Reserve announced a rate cut of 50 basis points to 1.00% -1.25% on the evening of the 3rd Beijing time. This is the Federal Reserve since 2008 The biggest interest rate cut in the past year.
However, the market didn't seem to buy the Fed's "fire-saving" sharp interest rate cut. After half an hour of opening on the day, the US stocks turned from rising to falling, and all three major stock indexes closed down nearly 3%.
Experts believe that the reason why the market does not buy it is that the emergency interest rate cut cannot fundamentally resolve the contradiction.
Tan Kai, head of the strategy group of the Yuekai Securities Research Institute, told the client of Sino-Singapore Jingwei: "At present, US stocks are affected by many risk factors, and it is difficult to cut interest rates fundamentally."
According to Tan Wei, since 2008, the US Federal Reserve has cut interest rates six times, and almost all US stocks have undergone a significant round of adjustment in the previous period. With the advance of interest rate cuts, US stocks have been boosted and stabilized. But this level of stimulus weakened significantly in the last two rounds of interest rate cuts. For example, the annualized rate of return of the S & P 500 during the last two rounds of interest rate cuts is -11.17% and -32.31%, respectively.
In addition, Wang Jianhui, the general manager of the Capital Securities R & D Department, believes that the Fed said that the interest rate cut was in response to the risk of economic activity caused by the new crown pneumonia epidemic, and the United States' response to the epidemic did not give the market full confidence. "After the outbreak in the United States, the response measures were not very rich, or not very determined. With China's precedent, everyone would intentionally or unintentionally feel that the government's response was not so strong and would be more pessimistic. "
Wang Jianhui also pointed out that the hurried interest rate cut by the Fed will also give the market a worry. "If the epidemic alone is not a particularly crisis for an essentially healthy economy, the Fed's emergency drop of 50 basis points will make the market feel that it is likely that the impact of the epidemic will exceed the expectations of the Fed and the market. . "
In fact, there were some signs of weakening in the US economy before the crisis. The US manufacturing PMI fell to 50.8 in February from 51.9 in January, the lowest level in six months. At the same time, the service industry PMI fell to 49.4, down from 53.3 in January. The performance of prices has not allowed the Fed to sit back and relax. Since October last year, the US CPI has been rising continuously. In January 2020, the CPI rose by 2.5% year-on-year. In the past 4 months, the price of medical care in the United States has risen between 4.2% and 4.5, and the market is worried that the epidemic may exacerbate this trend.
"If there is an epidemic in this state, obviously it may be overwhelming for the overall weak economy." Wang Jianhui said.
In addition, Wang Jianhui believes that the US stocks have not been fully adjusted in the early stage. From a technical perspective, the S & P 500 should be able to form a shock between 2500 and 2600 points, which is the goal of a phase adjustment.
Dong Dengxin, director of the Institute of Finance and Securities of Wuhan University of Science and Technology, believes that all the advantages are negative. The short selling by U.S. stocks, taking advantage of the Fed's interest rate cuts, indicates that the U.S. bull market reversal has reached market consensus. (Zhongxin Jingwei APP)
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