Unable to shake off credit market angst, Wall Street turns its attention to an upcoming US Federal Reserve meeting where policymakers will attempt to restore market confidence.
Confidence was shaken again in the the past week as investment giant Bear Stearns said it had gained emergency funds from the Federal Reserve Bank of New York and rival bank JPMorgan Chase to shore up its stretched finances.
Market participants said Bear Stearns' woes, triggered by mounting losses from mortgage-backed securities, and ongoing economic worries will likely spur the Fed to cut US interest rates at a policy meeting on Tuesday.
Most economists expect the US central bank to cut its key short-term federal funds interest rate, but opinion is divided over the size of a possible cut. Analysts believe it will be between 50 and 100 basis points, marking a significant reduction in borrowing costs.
The Fed has slashed its fed funds rate by 225 basis points to 3 percent since September in a bid to shore up economic momentum which is being threatened by a multiyear housing slump, a credit crunch, rising jobs cuts and skyrocketing crude oil prices.
Despite such turmoil, the stock markets mostly posted modest gains in the past week.
The leading blue-chip Dow Jones Industrial Average rose 0.48 percent for the week ended on Friday to close at 11,951.09 points, although the index is down 10 percent for the year to date.
The NASDAQ composite finished the week unchanged at 2,212.49, while the broad-market Standard & Poor's 500 index gained 0.4 percent to 1,288.14.
"We are projecting that the FOMC [Federal Open Market Committee] will vote to reduce the federal funds rate by 75 basis points on March 18. There is an outside chance of a deeper 100-basis-point cut, given turbulent conditions in financial markets," economists at Global Insight said in a briefing note.
The yield on the 10-year Treasury bond declined to 3.421 percent from 3.541 percent a week earlier, while that on the 30-year bond fell to 4.348 percent from 4.541 percent.
The New Taiwan dollar is on the verge of overtaking the yuan as Asia’s best carry-trade target given its lower risk of interest-rate and currency volatility. A strategy of borrowing the New Taiwan dollar to invest in higher-yielding alternatives has generated the second-highest return over the past month among Asian currencies behind the yuan, based on the Sharpe ratio that measures risk-adjusted relative returns. The New Taiwan dollar may soon replace its Chinese peer as the region’s favored carry trade tool, analysts say, citing Beijing’s efforts to support the yuan that can create wild swings in borrowing costs. In contrast,
Nvidia Corp’s demand for advanced packaging from Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) remains strong though the kind of technology it needs is changing, Nvidia CEO Jensen Huang (黃仁勳) said yesterday, after he was asked whether the company was cutting orders. Nvidia’s most advanced artificial intelligence (AI) chip, Blackwell, consists of multiple chips glued together using a complex chip-on-wafer-on-substrate (CoWoS) advanced packaging technology offered by TSMC, Nvidia’s main contract chipmaker. “As we move into Blackwell, we will use largely CoWoS-L. Of course, we’re still manufacturing Hopper, and Hopper will use CowoS-S. We will also transition the CoWoS-S capacity to CoWos-L,” Huang said
Nvidia Corp CEO Jensen Huang (黃仁勳) is expected to miss the inauguration of US president-elect Donald Trump on Monday, bucking a trend among high-profile US technology leaders. Huang is visiting East Asia this week, as he typically does around the time of the Lunar New Year, a person familiar with the situation said. He has never previously attended a US presidential inauguration, said the person, who asked not to be identified, because the plans have not been announced. That makes Nvidia an exception among the most valuable technology companies, most of which are sending cofounders or CEOs to the event. That includes
VERTICAL INTEGRATION: The US fabless company’s acquisition of the data center manufacturer would not affect market competition, the Fair Trade Commission said The Fair Trade Commission has approved Advanced Micro Devices Inc’s (AMD) bid to fully acquire ZT International Group Inc for US$4.9 billion, saying it would not hamper market competition. As AMD is a fabless company that designs central processing units (CPUs) used in consumer electronics and servers, while ZT is a data center manufacturer, the vertical integration would not affect market competition, the commission said in a statement yesterday. ZT counts hyperscalers such as Microsoft Corp, Amazon.com Inc and Google among its major clients and plays a minor role in deciding the specifications of data centers, given the strong bargaining power of
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