US-Japan Central Bank Meetings This Week Expected to Shake Markets
SingTao · 1 SOURCESabout 2 hours ago2 MIN
Summary
Middle East tensions are pushing oil prices above $100 per barrel as Yemen Houthi forces disrupt Red Sea shipping lanes, with vessel traffic through the Bab-el-Mandeb Strait falling to single digits. US inflation data released last Friday showed August CPI rising 0.4% month-over-month, prompting markets to price in a 90% probability of Federal Reserve rate hikes this week. Hong Kong's Hang Seng Index fell 845 points last week, breaking below all moving averages as investors remain cautious despite the index dropping below the 25,000 level.
Key Points
- NY crude oil holding firmly above $100 per barrel as Houthi forces captured the Red Sea town of Mocha, reducing Bab-el-Mandeb shipping to single digits from 30 vessels the previous day
- US August CPI came in at 0.4% month-over-month growth, exceeding market expectations of 0.2%, while core CPI year-over-year slowed to 2.4%
- Federal Reserve is expected to implement its first rate hike in three years this week, with traders pricing in approximately 90% probability of a 0.25 percentage point increase
- Market consensus now anticipates at least three cumulative rate hikes by June 2027, up from the previous expectation of two hikes
- Despite higher-than-expected US PPI and CPI data, the Dow Jones Industrial Average rallied 509 points (0.98%) to 52,573 on Friday, with Dell and HP Enterprise both hitting record closing highs
- Hang Seng Index dropped 845 points for the week, closing at 24,805, breaking below the 0.382 Fibonacci retracement level of the June-August rebound at 24,797
- Technical support levels identified at 24,563 and 24,363, with resistance clusters around 25,150-25,250 where the 5-day, 50-day, and 100-day moving averages converge
Why It Matters
This week brings a confluence of market-moving events including the Federal Reserve rate decision, Japan's central bank policy meeting, mainland China's three economic indicator releases on Tuesday, and Hong Kong's policy address. With oil prices elevated and rate hike expectations rising, Hong Kong investors face a challenging environment where the index appears trapped in a downward spiral without significant buying support emerging despite the pullback below 25,000.
This week brings a confluence of market-moving events including the Federal Reserve rate decision, Japan's central bank policy meeting, mainland China's three economic indicator releases on Tuesday, and Hong Kong's policy address. With oil prices elevated and rate hike expectations rising, Hong Kong investors face a challenging environment where the index appears trapped in a downward spiral without significant buying support emerging despite the pullback below 25,000.