FOMC Minutes: No Plans to Ease Fight against Inflation

Yesterday’s earlier gains for U.S. equities phased down after disappointing minutes from last month’s Fed meeting that indicated the policymakers still have no plans to ease up on their agenda to fight inflation. Still, the Dow Jones, S&P 500, and Nasdaq Composite all bounced back from two straight losing sessions to finish in positive territory despite muted Fed’s comments.

Boeing (BA) shares were among few names which fueled some optimism after Egypt bought 12 helicopters for $426 million. Salesforce (CRM) and Amazon (AMZN), however, said they aim to cut workforce by at least 10% outlining a difficult business environment. Shares of Intel (INTC) and other semiconductor manufacturers advanced on a report that China’s support of its microchip industry may not be as definitive as expected. Apple (AAPL) and Tesla (TSLA) shares rebounded after the previous day’s precipitous drops. Shares of streaming service providers, including Walt Disney (DIS) and Warner Bros Discovery (WBD), were also higher.

However, Microsoft (MSFT) shares lost 4% as UBS analysts downgraded the stock and cut the price target, pointing to potential weakness in the company’s Azure cloud computing and Office 365 businesses. It was a second day of big losses for health insurance providers, with Cigna (CI), Elevance Health (ELV), and UnitedHealth Group (UNH) among the worst-performing stocks in the S&P 500.

Today, U.S. futures swung between gains and losses. European equity futures inched lower, with traders being cautious about commentaries from the Federal Reserve’s latest minutes of the meeting. Contracts for the Euro Stoxx 600 index fell to indicate the first decline in three sessions for the region-wide benchmark. Losses in drugmakers GSK (GSK.L) and AstraZeneca (AZN.L) weighed on the FTSE 100, losing 1.6% and 0.6%, respectively. Bank of England policymakers will be looking for clues that a weakening economy is translating into softer price pressures in its December Decision Maker Panel survey. Expected data include UK services PMIs, as well as Austrian and Italian inflation. Next, a UK retailer, will release a sales and revenue update, as analysts see the company reporting a strong end to the year.

Meanwhile, stock benchmarks across Asia climbed as investors eyed China’s uneasy reopening. Mainland China and Hong Kong equity gauges rose in a rally, helped along by news China will gradually reopen its border with Hong Kong. The Hang Seng Index climbed to the highest level since July led by Meituan and Alibaba Group Holding Ltd., signaling fresh appetite for mainland tech.

Chinese leader Xi Jinping and his Philippine counterpart Ferdinand Marcos Jr. have agreed to strengthen economic ties and resume talks on oil exploration, as they look to revive their economies amid the pandemic downturn and friction over contested areas of the South China Sea. Xi met with Marcos Jr. on Wednesday during the Philippine President’s first state visit to Beijing, where the two leaders agreed to “continue to properly handle maritime issues through friendly consultation,” according to a readout from China’s Ministry of Foreign Affairs.

All in all, Mainland China's Shenzhen Component ended the day up 2.13%, closing at 11,332.01 while the Shanghai Composite rose 1.01% to 3,155.22. Hong Kong's Hang Seng index jumped 1.25% in its final hour of trade, paring some of its earlier gains of more than 2%, as investors digested an improved reading in China's Caixin services Purchasing Managers' Index for December. Hong Kong's S&P Purchasing Managers' Index also showed eased pressure in the factory activity.

Australia's S&P/ASX 200 ended fractionally higher at 7,063.6. In Japan, the Nikkei 225 was up 0.40% at 25,820.8, while the Topix added 0.04% to close at 1,868.9. The Korean Kospi rose 0.38% to end at 2,264.65.