On Friday local time, due to the Thanksgiving holiday, the US stock market closed three hours early, and as of the close, the three major stock indexes had mixed gains and losses. From a weekly perspective, the performance of the US stock market has been noticeably warm since November. This week, the Dow Jones Industrial Average rose 1.27%, the S&P 500 index rose 1%, and the Nasdaq rose 0.89%, all recording four consecutive positive days on the weekly chart, and is expected to achieve its best monthly performance in over a year.
The US stock market experienced intensive selling from the end of July to October this year, as investors became increasingly concerned that the Federal Reserve would keep interest rates high for a longer period than expected. However, the market has recently begun to be optimistic that the Federal Reserve will not further raise interest rates and may even start cutting rates in 2024, which is the main reason for the recent rise in the US stock market.
In addition, on November 24th local time, Berkshire, a subsidiary of Warren Buffett, cleared all investments in Paytm, the largest digital payment company in India, and sold nearly 2.5% of its stake in the company through a bulk transaction. According to foreign media estimates, Berkshire's investment suffered a loss of approximately 6 billion rupees (approximately 72 million US dollars), with a loss rate of approximately 30%. Paytm's parent company, One 97 Communications Ltd., saw a sharp 5% drop in the Indian stock market during trading, with the closing decline narrowing to 3%.
US stock market weekly four consecutive bullish days, with bright performance in concept stocks
On Friday local time, due to the Thanksgiving holiday, the US stock market closed three hours early, and as of the close, the three major stock indexes had mixed gains and losses. The Dow Jones Industrial Average rose 0.33% to 35390.15 points, the S&P 500 Index rose 0.06% to 4559.34 points, and the Nasdaq fell 0.11% to 14250.86 points. This week, the Dow Jones Industrial Average rose 1.27%, the S&P 500 index rose 1%, and the Nasdaq rose 0.89%, both recording four consecutive positive weekly trends and expected to achieve their best monthly performance in over a year.
On the market, most technology stocks fell, with Nvidia down 1.93%, Apple down 0.7%, Amazon up 0.02%, Netflix up 0.33%, Google down 1.3%, Meta down 0.95%, and Microsoft down 0.11%.
Bank stocks collectively rose, with JPMorgan Chase up 0.11%, Goldman Sachs up 0.12%, Citigroup up 0.36%, Morgan Stanley up 0.18%, Bank of America up 0.4%, and Wells Fargo up 0.29%.
Energy stocks saw mixed gains and losses, with ExxonMobil up 0.55%, Chevron up 0.47%, ConocoPhillips up 0.54%, Schlumberger up 0.29%, and Western Oil down 0.03%.
Popular Chinese concept stocks generally rose, with the Nasdaq China Golden Dragon Index rising 1.62%. Haichuan Securities rose 40.79%, Shangcheng Shuke rose 24.37%, Good Future rose 15.63%, Shanda Technology rose 13.04%, Yihang Intelligence rose 11.27%, Jianan Technology rose 7.45%, and Miniso rose 5.27%.
In the European market, the three major stock indexes in Europe closed slightly higher, with Germany's DAX index rising 0.22% to 16029.49 points, France's CAC40 index rising 0.2% to 7292.8 points, and the UK's FTSE 100 index rising 0.06% to 7488.2 points. This week, the DAX index in Germany rose 0.69%, the CAC40 index in France rose 0.81%, and the FTSE 100 index in the UK fell 0.21%.
Is the US stock market experiencing a wonderful moment as inflation cools down and the economy strengthens?
The US stock market experienced intensive selling from the end of July to October this year, as investors became increasingly concerned that the Federal Reserve would keep interest rates high for a longer period than expected. However, the market has recently become optimistic that the Federal Reserve will not further raise interest rates and may even begin cutting rates in 2024.
With the continuous rise of the US stock market since November, the term "blonde girl" has once again sparked discussion in the market. "Golden haired girl" is an American proverb commonly described in economics as the perfect moment for an economy to maintain growth, low unemployment rates, and little threat of inflation. That is to say, in the future, the inflation of the US economy will continue to cool, but there will be no economic recession, and interest rates will tend to stagnate or fall, which is beneficial for the performance of the stock market.
And many institutions have reviewed the performance of US stocks, believing that the best period for US stocks to perform during the Federal Reserve's shift is during the period of interest rate hikes to rate cuts. Logically speaking, during this stage, the market expects monetary policy to shift from tight to loose, while the economic fundamentals have not deteriorated significantly at this time, and US stocks often start an early round of gains.
Data shows that after the last six cycles of Fed rate hikes, the S&P 500 achieved double-digit returns five times in the 12 months following the last rate hike. Jingshun Asset Management believes that July 2023 marks the end of the latest round of interest rate hikes. US asset management giant Capital Group has stated that the Federal Reserve's measures to maintain interest rates and imply the end of the tightening cycle have created "opportunities for investors to buy global stocks.".
Goldman Sachs proposed in its 2024 outlook report that the majority of returns on US stocks next year will be concentrated in the second half of the year, which is consistent with its expectation that the Federal Reserve will only cut interest rates in the fourth quarter of 2024. The bank believes that next year will still be dominated by "high-quality" stocks, growth stocks with high capital returns, and cyclical stocks that have been suppressed.
Buffett clears his position on India's "Alipay" Paytm
On November 24th local time, Warren Buffett's Berkshire Hathaway Inc. (hereinafter referred to as Berkshire) sold all its shares in Indian digital payment company Paytm for approximately 13.71 billion Indian rupees (164.7 million US dollars) through a bulk transaction. Exchange data shows that BH International Holdings, a subsidiary of Berkshire, sold over 15.6 million shares of the digital payment company's stock at a weighted average price of 877.29 rupees per share.
According to Indian stock market data, BH International Holdings, which is fully associated with Berkshire Hathaway, quickly sold 15.6 million shares of One 97 Communications Ltd., equivalent to 2.5% of its share capital, after the Indian stock market opened. One 97 Communications Ltd. is the parent company of Paytm.
According to transaction data, the shares sold by Berkshire in this transaction were taken over by Captall Mauritius Investment and Ghisallo Master Fund LP, with 7.6 million and 4.3 million shares respectively. JPMorgan Chase India was the exclusive broker for this transaction.
After the completion of the transaction, One 97 Communications Ltd. plummeted 5% in the Indian stock market, narrowing its closing decline to 3.3%, but still achieving its largest daily decline since October 26th. Since the beginning of this year, Paytm's stock price has risen by 68%, which seems to be the reason why Berkshire Hathaway has decided to liquidate its position: Paytm's current stock price is still nearly 60% lower than its IPO price.
Berkshire began investing in Paytm at a valuation of approximately $12 billion in 2018, and in the following quarters, Paytm's valuation increased to $16 billion. But later, due to a disastrous IPO, Paytm's stock price plummeted by 75%. With the stock price rebounding this year, Berkshire Hathaway decided to cut losses in a timely manner and ultimately fully liquidate its position. According to foreign media estimates, Berkshire Hathaway sold a total of 13.7 billion rupees of Paytm stocks, resulting in a loss of approximately 6 billion rupees and an investment loss rate of 30%.
The wave of layoffs by financial giants has spread to the UK
The wave of layoffs by European and American financial giants is still ongoing, with the latest round concentrated in the UK.
According to Reuters, Barclays Bank is developing a cost saving plan of up to £ 1 billion, which may involve layoffs of up to 2000 people. It is reported that Barclays Bank's £ 1 billion cost savings target will account for approximately 7% of the bank's £ 15 billion basic annual operating expenses in 2022.
The potential layoffs may mainly occur in Barclays Execution Services, which is internally referred to as "BX". The BX department was established in 2017, integrating the bank's two main business units - UK retail banking and international business, with the aim of eliminating duplicate business and implementing post crisis risk management rules.
In recent years, the number of BX employees has increased significantly, and costs have also risen accordingly. According to regulatory documents, as of the end of 2022, the number of employees in the department has increased from 20000 at the end of 2017 to approximately 22300, currently accounting for more than a quarter of Barclays' total employees. Meanwhile, the average annual salary of BX employees has increased from £ 1.8 billion to £ 2 billion.
In addition, Lloyd's Bank, one of the four largest private banks in the UK, will also become the latest financial institution to announce cost cuts, with over 2500 jobs at risk. According to foreign media reports, the bank is considering cutting a series of middle-level management positions, including analyst and product management positions, and is expected to hold consultations with employees next week. According to sources, although 2500 positions are under review, equivalent to one twentieth of the total number of positions, the number of positions that management ultimately hopes to lose may be lower.
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