Fed rate cut timing in focus

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Hong Kong led losses
Asia markets were mixed on Tuesday, as Hong Kong led losses on the back of Evergrande’s liquidation order. The Hang Seng index dropped over 2%, while the mainland Chinese CSI 300 was down nearly 1%. Overnight in the U.S., the S&P 500 closed at a fresh high as Wall Street looked ahead to Big Tech earnings and the Federal Reserve’s rate policy decision. The Dow was also up, while the Nasdaq saw the best performance of the three major indexes, up more than 1% in the session.

Quiet luxury gains traction
One of last year’s biggest viral fashion trends on social media was “quiet luxury.” The trend, which relies on subtlety and minimalism, is fast gaining momentum among investor portfolios and has shown actual returns. 

China EV race heats up
Chinese battery and electric car maker BYD expects China’s EV market to remain competitive in the next two to three years. BYD, with total vehicle production in 2023 surpassing that of Elon Musk’s Tesla, also said it is willing to work with its rival to grow the market.

DOJ and SEC make cryptocurrency fraud charges
The Department of Justice and the Securities and Exchange Commission have unveiled charges in a $1.9 billion cryptocurrency fraud scheme known as HyperFund, among other names. Erek Barron, the U.S. attorney for Maryland, said: “The level of alleged fraud here is staggering.”

[PRO] SK Hynix analysts’ top call
South Korea’s SK Hynix, the world’s second-largest memory chipmaker, is getting a lot of attention. Analysts are bullish on the stock and expect SK Hynix to drive the next generation of AI growth.

Wall Street is on Fed watch again.

The timing of interest rate cuts is certainly the top issue on the minds of most investors.

The market is widely expecting the central bank to keep rates unchanged at the Fed’s two-day meeting, which ends Wednesday.

Still, investors are hoping the Fed will give strong signals on the path for interest rates, especially when they may be cut. 

Economists are currently split on the timing of rate cuts. Some expect the Fed to move as early as March, while others anticipate a rate cut sometime in May or June.

Recent good news on the economic front could influence the central bank’s decision.

Inflation is certainly getting close to the Fed’s 2% target rate. December’s personal consumption expenditures price index, a key inflation gauge for the Fed, was published Friday. It rose 0.2% from the previous month and 2.9% on an annual basis.

On Thursday, a government report showed the U.S. economy grew at an accelerated pace in the final three months of 2023, capping the year on a solid note. 

Both data could possibly give the Fed a green light to start cutting interest rates later this year. Yet, the Fed could prefer to err on the side of caution and delay rate cuts as much as possible, until its confident inflation is firmly under control.

Let’s hope the January policy meeting sheds more clarity on what direction the Fed decides to take.