World Street | Fed's rate cut timeline, S&P 500 and Nasdaq at record high and more

World Street offers a sneak peek into the world of business and economy.

The US Federal Reserve's revised dot plot indicates a projection of just one interest rate cut in 2024. US benchmark indices S&P 500 and Nasdaq posted record closing on softer-than-expected May inflation print. Shares of the China's debt-ridden Evergrande Group's new energy unit tanked 27 percent in the last session. China hopes the European Union will reconsider the tariffs imposed on Chinese electric vehicles. Samsung has come up with a plan to deliver their AI chips faster. Chinese central bank extends support to affordable housing. All this and much more on the June 13 version of World Street.

New plot in the 'dot plot'

The US Fed policy statement following the two-day FOMC meeting maintained a hawkish stance, contrary to market expectations. As anticipated, the Fed kept the key policy rate unchanged at 5.25-5.5 percent. However, the updated dot plot now indicates only one interest rate cut in 2024, down from three projected in March.

Fed Chairman Jerome Powell noted that inflation data has "eased somewhat," but emphasised that the committee needs to see "more good data" to "bolster" confidence that inflation is indeed returning towards the target before considering rate cuts.

Party in the house

Despite the Fed's surprise hawkish stance, US benchmarks S&P 500 and Nasdaq soared to new record highs, largely boosted from the softer-than-expected May consumer print. The S&P 500 crossed the 5,400-mark for the first time.

However, stocks turned volatile following the Fed's policy outcome and press conference with Fed Chair Jerome Powell. The S&P 500 and Nasdaq pared gains late in the session, while the Dow ended the day nearly flat.

Hope not lost

China hopes the European Union will reconsider high tariffs on Chinese electric vehicles and avoid going further in the “wrong direction,” according to a report in the state-backed news outlet Xinhua.

This statement follows the European Commission's decision to impose additional duties of up to 38.1 percent on imported Chinese electric cars starting from July. China has indicated it will take measures to safeguard its interests. "Given their economic structure and sheer size, China and the EU are best served by teaming up on major economic and trade issues," the Xinhua stated.

Not so grand

Shares of China's battered property developer  Evergrande's new energy vehicle arm nosedived 27 percent in the previous session after the firm announced facing the risk of losing key assets, including land and equipment. The subsidiary of developer China Evergrande disclosed that local administrative bodies had demanded repayment of 1.9 billion yuan ($261.91 million) in subsidies from its units.

Found a way

Samsung Electronics announced that its contract manufacturing business plans to offer a one-stop shop for clients to expedite the production of artificial intelligence (AI) chips. By integrating its leading memory chip, foundry, and chip packaging services, Samsung aims to leverage the AI boom.

With clients working through a single communication channel that coordinates Samsung’s memory chip, foundry, and chip packaging teams simultaneously, production time for AI chips has been reduced by around 20 percent, according to Samsung.

Given the soaring demand for AI chips and the need for highly integrated components to process vast amounts of data quickly and efficiently, Samsung believes its comprehensive approach will be a significant advantage moving forward.

State support

China's central bank held a meeting to enhance financial support for affordable housing, aiming to increase the sales of unsold housing stock amidst a property crisis threatening the world's second-largest economy.

Last month, the central bank established a 300 billion yuan ($41.4 billion) relending loan facility for affordable housing. The virtual meeting was the latest effort to promote this facility among local governments and banks.

Beijing has authorised local state-owned enterprises to purchase unsold completed homes, with the relending facility designed to assist these purchases at "reasonable prices." The People's Bank of China (PBOC) stated that the facility aims to expedite the sales of existing commercial housing stock in a market-oriented manner.