Good evening everyone, let's continue to focus on the news from the overseas markets.
The Riksbank cut interest rates by 25 basis points as expected and left the door open for a 50 basis point cut.
On September 25th, the Riksbank lowered the benchmark interest rate by 25 basis points, in line with the expectations of economic experts. The Riksbank reduced the policy rate from 3.50% to 3.25%.
The Riksbank indicated that more significant action may be taken in the coming months to stimulate the sluggish economy.
The Riksbank stated on Wednesday: "There may also be a rate cut at the remaining two monetary policy meetings this year." It also pointed out that "one of these meetings may involve a rate cut of 50 basis points." The central bank added: "The reduction in the policy rate is expected to be significantly faster than previously anticipated."
Kyle Chapman, a foreign exchange strategist at Ballinger Group, said, "Sweden's inflation problem has been resolved, even exceeding expectations." He predicted that the Riksbank will need to take more aggressive measures. "I believe that there is a strong likelihood that we will see two 50 basis point rate cuts before the end of the year."
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As economic growth is sluggish and unemployment rates are rising, calls for interest rate cuts are growing louder. The Riksbank stated that its new guidance should help address these challenges.
The central bank said: "These changes mean that monetary policy has made a relatively large adjustment towards a more expansionary direction, which will improve household finances and make it easier for businesses to invest."
UBS analysts said they now expect a 50 basis point rate cut in November and a 25 basis point rate cut in December.
Nordea Bank's Chief Analyst, Torbjorn Isaksson, wrote that the Riksbank's interest rate path indicates a 100% likelihood of a 25 basis point rate cut at each of the next three meetings, but the central bank has left the door open for a 50 basis point rate cut at one of the remaining two meetings in 2024. Nordea Bank expects that the policy rate will be reduced by 25 basis points at each of the next three meetings, bringing the rate down to 2.5% by January.Analysts at Nordea Bank in Sweden predict that the Swedish central bank will cut interest rates by 50 basis points in November, by 25 basis points in December, and will make two more cuts in the first quarter of 2025. The analysis suggests that Sweden has avoided the most unfavorable economic scenario, which previous market forecasts had depicted as the country most severely affected by inflation and rising interest rates in Europe.
Nevertheless, the economy of this Nordic country has essentially stagnated over the past three years. According to official data, Sweden's output contracted by 0.3% in the second quarter.
The market expects Sweden's economic recovery to accelerate by the end of this year through 2025, benefiting from tax cuts and increased spending, which are part of an expansionary budget proposal announced earlier this month.
James Pomeroy, Global Economist at HSBC, stated: "The rapid adjustment of policy interest rates should help boost consumers' purchasing power and may speed up the pace of business investment, shifting the Swedish economy from a very weak growth to a more favorable condition."
U.S. Stock Market Situation
Tonight's U.S. stocks showed mixed performances, with the Dow Jones Industrial Average falling by 200 points and the Nasdaq Composite experiencing a slight increase.
Nvidia's market value has returned to $3 trillion.
Berkshire Hathaway, owned by Warren Buffett, has once again sold a large amount of Bank of America stock. Since mid-July, the cumulative amount sold is approximately $9 billion, reducing its stake to 10.5%.
According to the latest regulatory filings, the Omaha-based conglomerate sold about 21 million shares of Bank of America from September 20th to September 24th, cashing out approximately $863 million.Once the stake drops below 10%, Berkshire Hathaway will no longer be required to disclose any transactions within two business days.
Buffett purchased preferred shares and warrants of Bank of America for $5 billion after the financial crisis in 2011. In 2017, he converted these warrants, making Berkshire Hathaway the largest shareholder of Bank of America. Subsequently, he added another 300 million shares to his holdings in 2018 and 2019.
Regarding Buffett's stock sales, Bank of America CEO Brian Moynihan stated that he does not believe the stock is overvalued, and the market always likes to analyze every move made by Buffett.
Moynihan said earlier this week: "I think the market is speculating about his actions. He has his own investment strategies and theories, and he has sold many different companies... but at the same time, he is also buying companies, which leaves the market to interpret. From our perspective, our stock is very worth buying, and we are repurchasing it every day."
Chinese concept stocks are facing adjustments, with the Nasdaq Golden Dragon Index falling by 2%.