每日市場點評 --- January 29, 2008

All three major indices closed high on this Tuesday in anticipation of the Fed’s decision tomorrow. Volume is on the light side and is expected to continue to be so until 2:15pm tomorrow. After that, volume is expected to pick up dramatically. It may be interesting to watch this kind of dramatic market behaviour every a few weeks. However, is there really such a big difference in terms of 25bps or 50bps cut to the real economy? I’m leaving this question to economy experts. Currently the market has priced in an 87% chance of 50bps cut, similar to the odds right before the previous Fed meeting on Dec 11th. But considering that the market dropped as much as 2000 points since the Fed’s previous decision, the Fed Chairman Bernanke may really think twice before making any decision that is against market consensus. The economic news this morning was mostly positive. Durable Goods Orders came above expectation and the data for the previous month were also revised up, indicating less chance of an imminent recession. The Consumer Sentiment number was also higher than expected. The latest $30 billion loans of the Fed term auction were set at an interest rate of 3.10%, well below the current Fed Fund rate. Interest rate sensitive sectors such as financials and home builders were outperforming the broad market. It is worth noting that many home builders have seen their stocks rising by more than 60% from their lows just 1 month ago. Tech stocks, on the other hand, were under a little pressure after disappointing earning results from SanDisk and EMC. After the bell, Yahoo! just lowered its revenue guidance and it should add further pressure to the tech sector in tomorrow’s trading.