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Fed Rate Cut Hopes Spark Market Rally
22 Nov
Summary
- US stocks rallied Friday on Fed rate cut speculation.
- Japanese yen carry trade faces pressure from rising rates.
- Eli Lilly achieved a $1 trillion market cap milestone.
US stock markets experienced a significant rally on Friday, driven by speculation that the Federal Reserve might cut interest rates for a third time this year. This optimism led to substantial gains in rate-sensitive sectors, with Home Depot posting a notable increase. Eli Lilly made history by becoming the first drugmaker to achieve a $1 trillion market capitalization, marking a significant corporate milestone.
Meanwhile, the Japanese yen carry trade is experiencing considerable pressure. Rising borrowing costs in Japan, now at 30-year highs, are squeezing profit margins for this investment strategy. This situation could lead to forced selling and market movements detached from underlying fundamentals, though its direct impact on US markets remains under observation.
Despite external pressures and ongoing concerns about artificial intelligence spending and consumer sentiment, recent US corporate earnings reports did not indicate any meaningful deterioration in fundamental business conditions. Analysts at HSBC downgraded Palo Alto Networks, citing decelerating growth, a view that contrasts with our positive outlook on the company's platformization strategy and growth trajectory.
