US inflation pressure eases, prompting the Federal Reserve to shift its monetary policy towards easing. The market expects the probability of a 25 basis point rate cut in December to rise to 75.7%, with an anticipated total rate cut of 100-150 basis points throughout 2024. Financial sector: banks, insurance, securities, and other financial institutions will benefit from improved interest margin income and valuation enhancement. Commodity sector: The Federal Reserve's shift in monetary policy will weaken the US dollar index, favoring the stabilization and rebound of commodity prices. Technology growth sector: Improved liquidity will drive an increase in risk appetite, and high-growth industries such as new energy, semiconductors, and artificial intelligence are likely to attract funding.
After the release of US inflation data, market expectations for a shift in the Federal Reserve's monetary policy have significantly warmed. The latest data shows that the probability of a 25 basis point rate cut in December has risen to 75.7%, which greatly boosts confidence in the global financial markets. Investors generally believe that the Federal Reserve may initiate a new round of rate cuts as early as the beginning of 2024, injecting strong momentum into global capital markets.
The emergence of this positive news mainly stems from the continued easing of inflation pressure in the US. The recently released core PCE price index year-on-year growth rate has dropped to 3.5%, hitting a near two-year low. At the same time, signs of cooling have also appeared in the US labor market, creating favorable conditions for the Federal Reserve to shift towards an easing policy. The market generally expects that the Federal Reserve may cumulatively cut rates by 100-150 basis points throughout 2024.
Key beneficiary sector analysis:
Financial sector: Against the backdrop of rising expectations for Federal Reserve rate cuts, banks, insurance, securities, and other financial institutions will directly benefit from improved interest margin income and valuation enhancement. It is expected that the profitability of related listed companies will gradually recover.
Commodity sector: The Federal Reserve's shift in monetary policy will weaken the US dollar index, favoring the stabilization and rebound of commodity prices. Sectors such as gold and non-ferrous metals are expected to welcome a valuation recovery trend.
Technology growth sector: Improved liquidity will drive an increase in risk appetite, and high-growth industries such as new energy, semiconductors, and artificial intelligence are likely to attract funding.
