Market Shocked by Fed Rate Cut Speculation, Costco’s Strong Performance, and Special Dividend

Fed Rate Cut Speculation Shocks Market, Costco Reports Strong Performance and Special Dividend

Goldman Sachs analyst’s rate cut prediction and market reaction

After the conclusion of the Federal Open Market Committee (FOMC) meeting in December, the market quickly responded. However, comments from a New York Fed official shattered the market’s expectations of an early rate cut. New York Fed President John Williams stated in an interview with CNBC that the Fed is not currently discussing a rate cut, contradicting the market’s expectation of a rate cut in March. The Fed Watch from the Chicago Mercantile Exchange reflects a 67% probability of a rate cut.

Williams emphasizes data dependency and inflation trends

Williams emphasized that the Fed’s decisions will be data-dependent and that they are prepared to tighten monetary policy further if inflation pressures reverse. While acknowledging the current slowdown in inflation, he highlighted the need to monitor whether the target of 2% will be reached. Williams cautioned against making premature assumptions, emphasizing the unpredictability of data movements.

Costco’s Strong Quarterly Performance and Special Dividend Announcement

Costco surpasses expectations in quarterly results

Retail giant Costco reported better-than-expected earnings in its third-quarter results. The earnings per share (EPS) of $3.58 exceeded the estimated $3.4, and the revenue of $57.8 billion exceeded the estimated $57.3 billion. Costco’s e-commerce sales also saw a 6.3% increase compared to the previous year. Additionally, the company’s paid membership count grew by 6.3%.

Special cash dividend and stock performance

Building on its strong performance, Costco announced a special cash dividend of $15 per share, leading to a more than 4% increase in its stock price during morning trading.

Telefónica Considers Bidding for Oi’s Business in Brazil

Telecom company Telefónica explores potential bid for Oi

Telefónica is considering a bid for Oi, a major telecommunications company in Brazil, in order to expand its broadband customer base. However, no official approach has been made to Oi at this time.

Global Market Reacts to Fed Expectations

Mixed market sentiment in response to Fed expectations

The US stock market showed mixed reactions as investors continued to anticipate potential rate hikes by the Federal Reserve. The Nasdaq Composite Index continued its upward trend, while the S&P 500 and Dow Jones Industrial Average remained relatively stable. Investors closely monitored the actions of the Fed and speculated on the speed and intensity of future rate cuts.

US economic indicators and European market performance

The US services Purchasing Managers’ Index (PMI) for December exceeded expectations, indicating sustained economic expansion. However, the manufacturing PMI fell below expectations, suggesting a contraction in the sector. In Europe, the Euro Stoxx 50 index slightly rose, while the German DAX and French CAC40 indices showed moderate gains. Conversely, the UK’s FTSE index experienced a decline.

Hong Kong’s Vinda International Receives Acquisition Proposal

Vinda International receives proposal for business acquisition

Hong Kong-based Vinda International announced that it has received a proposal from RGE, owned by Indonesian billionaire Sukanto Tanoto, to acquire its tissue and diaper manufacturing business for up to HKD 2.613 billion (USD 335 million). The transaction is subject to regulatory approvals, including from Chinese authorities, and is expected to be completed by mid-2024.

Interest in the Chinese market amid geopolitical tensions

This acquisition comes at a time of heightened geopolitical tensions and a slowdown in the Chinese economy. It reflects the growing interest of multinational companies in the Chinese market and business opportunities, highlighting the potential for future growth.

Source: 한국경제 (Korea Economic Daily)