International Morning News | Traders Expect 50% Probability of Fed Rate Hike in October

U.S. Money | Traders Expect 50% Chance of Federal Reserve Rate Hike in October

The escalation of the Iran conflict has caused international oil prices to surge sharply, raising inflation concerns. Traders have increased the probability of the Federal Reserve raising interest rates in October to 50%, completely reversing previous expectations of rate cuts.

Inflation Concerns | UK 10-Year Gilt Yield Breaks 5% Level

Global bond markets have experienced a sell-off, with bond yields rising accordingly. The UK 10-year gilt yield has broken above 5%, pushing government borrowing costs to the highest level since the 2008 financial crisis. Market forecasts for UK monetary policy are divided; JPMorgan estimates the Bank of England will raise rates twice in April and July by 0.25% each, with previous expectations of no rate changes this year. Additionally, after the European Central Bank’s Thursday meeting, rates were held steady, but Bundesbank President Nagel stated that if inflation pressures increase further, the ECB may need to consider rate hikes in April. Investors currently see over a 50% chance of the ECB raising rates at the April meeting.

Fed Vice Chair Supports Three Rate Cuts This Year but Watches Iran War Impact

Federal Reserve Vice Chair Barr said he still supports three rate cuts before the end of the year and expects the U.S. economy to remain strong this year, but is concerned about the impact of the Iran war. Fed Governor Waller, citing unexpected job losses in February, initially planned to oppose rate hikes this week because he favors rate cuts; however, escalating oil shocks and the threat of persistent inflation have led him to adopt a more cautious stance until the effects of the Iran conflict become clearer.

Iran Conflict | Trump: I Don’t Want a Ceasefire

Tensions in the Middle East remain high. Trump stated, “We can talk to Iran, but I don’t want a ceasefire.” Reuters quoted U.S. officials saying that thousands of Marines and sailors are being deployed to the Middle East. Trump criticized NATO allies for lacking support for the U.S. and Israel in the Iran conflict, calling these long-standing allies “cowards.”

U.S. Stock Market | Dow Falls Over 440 Points, Both Major Indices Near Correction Zone

Currency markets are betting on a 50% chance of a Fed rate hike before the end of October. On Friday, the Dow dropped 652 points to a low of 45,369, closing down 443 points or 0.96%. The S&P 500 fell 1.51%, and the Nasdaq declined 2.01%. The Russell 2000, reflecting small-cap stocks, dropped 2.26%, entering correction territory. The China A50 index fell 2.92%. Tesla and Nvidia both declined 3.2%, Meta and Alphabet dropped over 2%, and FedEx raised its profit forecast for the year, initially surging 7.6% but closing up only 0.9%. Microchip Technology (SMCI) executives smuggled Nvidia chips into China, causing its stock to plunge 33.3%.

External Focus Briefs

• A California jury found Elon Musk guilty of fraud for attempting to acquire Twitter in 2022 at less than his initial $44 billion offer; damages could reach $2.6 billion.
• Tesla plans to purchase about $2.9 billion worth of photovoltaic manufacturing equipment in China to support Elon Musk’s long-term goal of establishing 100 GW of solar capacity in the U.S.
• The Wall Street Journal reports that Amazon founder Jeff Bezos is forming a $100 billion fund to acquire manufacturing companies and accelerate automation using AI technology.
• Bloomberg Billionaires Index shows 14 billionaires and families linked to the defense industry with net worth exceeding $28 billion, mostly outside the U.S.
• The Federal Reserve announced that U.S. household wealth increased by $2.2 trillion in Q4 last year, reaching a record high of $184.1 trillion.
• EPFR Global data shows that as of March 18, global equity funds attracted $62.2 billion, with U.S. equity funds accounting for $47.1 billion.
• U.S. 10-year Treasury yield briefly rose 11.4 basis points to 4.397%, while 2-year yields jumped 13.54 basis points to 3.9278%. UK 10-year gilt yield surged over 16 basis points to 5.005%, a new high since 2008.
• The U.S. dollar index rose 0.56% to 99.79, while the euro fell 0.54%, and the yen declined 1.07%. The Indian rupee dropped 1.22% to a record low.
• At 3 a.m. Hong Kong time Saturday, the onshore RMB/USD exchange rate closed at 6.905, down 177 pips from Thursday’s close.
• Bitcoin fell 2.73% to $69,398.
• Spot gold dropped 3.73%, hitting a low of $4,477.5 per ounce, and closed at $4,494.44, down 3.36%. Spot silver closed at $67.9015, down 6.74%.
• Israel announced it will no longer attack Iranian gas fields. Oil prices initially fell over 3%, but Brent crude rose 3.26% to $112.19 per barrel at the close, and U.S. WTI increased 2.9% to $98.32.
• Iran’s military threatened to deliver a destructive strike against “evil” U.S. and Israeli officials, commanders, and soldiers, saying they will no longer be safe even while on vacation abroad, and reaffirmed ongoing missile production.
• The UK government authorized the U.S. to use military bases within the country to strike Iranian missile sites involved in attacks in the Strait of Hormuz. Iranian Foreign Minister Amir Abdollahian responded that Iran will exercise its right to self-defense.
• NATO confirmed that, due to Middle East tensions, all NATO members have agreed to suspend training missions in Iraq and withdraw all personnel. Reuters reports the withdrawal involves hundreds of troops.
• U.S. officials say 232 U.S. soldiers have been injured since military actions against Iran began, with at least 13 deaths.
• The World Trade Organization estimates global merchandise trade will grow 1.9% this year, higher than the October 2022 forecast of 0.5%, but well below last year’s 4.6% increase.
• The Euro Stoxx 600 closed down 1.78%, with UK, France, and Germany indices falling 1.44%, 1.82%, and 2.01%, respectively.
• Shanghai Stock Exchange accepted the IPO application of Yushu Technology on the Sci-Tech Innovation Board, aiming to raise 4.202 billion yuan.
• Indonesian President Joko Widodo recently said that if the “Peace Committee” proposed by Trump fails to support Palestinian interests, Indonesia may withdraw from the mechanism.

Local Focus Briefs

• ADR Hong Kong Stock Connect Index closed at 24,602, down 675 points. HSBC (00005) down 3.2%, Alibaba (09988) down 3.1%, Tencent (00700) down 3%, Meituan (03690), HKEX (00388), AIA (01299) down over 2%.
• Hang Seng Index night futures closed at 24,725, down 552 points.
• The Census and Statistics Department announced that February’s overall consumer price index rose 1.7% year-on-year, higher than January’s 1.1%.
• The Hong Kong Housing Authority hearing on the maintenance tender issues at Hong Fook Court revealed that Director Hou Wah Kin has connections with five companies jointly bidding for the Hong Fook Court maintenance project.
• The hearing disclosed key factors leading to the tragedy, naming Housing Authority independent review team (ICU) building maintenance surveyor Liu Jiamin and senior surveyor Gu Xiaoping. The government stated it respects privacy and will not disclose their information.
• The Hong Kong Arts Centre launched the “Treasured Hong Kong” exhibition, featuring over 500 items with participation from more than 280 local artists.
• The 2026 World Happiness Report ranks Finland ninth consecutive year as the happiest country; Hong Kong is 90th, behind Armenia and Libya.
• GigaMedia (01989) debuted at HK$96, up 33.56% from the IPO price.
• Two new stocks will list next Monday: Feishu Innovation (03355) closed at HK$60.1 in the unofficial market, up 44.47% from IPO price; priced at HK$41.6, with a subscription oversubscription of 1,578.71 times and a 1% allotment rate. Guokun Technology (02701) priced at HK$10.8, with a 130.83 times oversubscription, and a 30% allotment rate; trading begins next Monday. In the unofficial market, it closed at HK$11.64, up 7.78%.
• Bloomberg reports ByteDance is preparing for an IPO of its automotive information and trading platform in Hong Kong.
• Mainland media reports that Saudi Savvy Games has recently reached a final agreement with ByteDance to acquire all shares of Moutai Technology for over $6 billion.
• Bloomberg reports that New World Development (00017) is considering a rights issue to inject capital, with a proposed fund-raising of $4 billion via rights or share placement.
• Hong Kong Investment Corporation and several institutions announced the establishment of the Hong Kong RISC-V Alliance, actively participating in global chip technology transformation.
• Hong Kong China Gas (00003) reported a 0.41% decline in profit last year, citing pressure to raise prices.
• CITIC Bank (00998) expects a 2.98% profit increase in 2025. The non-performing loan ratio is 1.15%, down 0.01 percentage points from the end of last year.
• Xpeng Motors (09868) reported a net profit of RMB 383 million in Q4 last year, its first quarterly profit.
• Zijin Mining (02899) profit increased 61.55% last year, with a final dividend of RMB 0.38 per share.
• China Power (02380) profit decreased 13.5% last year, with a final dividend of RMB 0.168.
• Oceanwide (03883) reported a loss of RMB 17.764 billion last year and did not pay a final dividend.
• Kowloon Development (00034) profit grew 12.89% last year, with a final dividend of HK$0.14.
• Wynn Macau (01128) profit declined 49.05% last year, with a final dividend of HK$0.223.
• China Hongqiao (01378) profit increased 1.18%, with a dividend of HK$1.65.
• Lixin Development (00488) expects a mid-year loss between RMB 1.1 billion and RMB 1.2 billion.
• Lixin International (00191) expects a mid-year loss between RMB 600 million and RMB 700 million.
• Alibaba’s latest flagship model Qwen 3.5-Max-Preview of the “Qianwen” chatbot was officially unveiled.
• MTR Corporation (00066), led by Sun Hung Kai Properties (00083), sold 61 units at the Tseung Kwan O Sunrise Bay Ha Yau Wan I project on its first day, with total transactions exceeding HK$1 billion.