Interest rate doubts slow down start to the new year
The US stock markets are not taking hopes of a rapid fall in key interest rates into the new year. Investors are cashing in on tech stocks in particular. The Chinese economy is also curbing the euphoria.
US equities started the first session of the year with little momentum. The Dow Jones index closed well up at 37,715 points. The S&P 500 lost 0.6 percent and the Nasdaq Composite fell by 1.6 percent. Weak data from China had raised concerns about the state of the global economy. There were also doubts as to whether last year's expectations of interest rate cuts were not exaggerated. Investors therefore sold off technology stocks in particular, which had risen rapidly in 2023. On the Nyse, 1296 (Friday: 782) price gainers were seen, compared with 1547 (2057) losers. A total of 59 (78) stocks closed unchanged.
The official Purchasing Managers' Index for the manufacturing sector in China fell in December, missing expectations and thus remaining in contractionary territory. "The PMI figures point to a slowdown in China's economic recovery in the final months of the year," said Stephen Innes, Managing Partner at SPI Asset Management. "This development is likely to put pressure on fiscal and monetary policymakers to take action, especially after leaders pledged to maintain a pro-growth stance until 2024," Innes added.
Oil prices rise
Adding to investor caution were growing geopolitical concerns after Iran announced plans to send a warship to the Red Sea. The US Navy had sunk several boats belonging to the Tehran-backed Houthi militia. Oil rose temporarily as a result, fueling concerns that higher energy costs could lead to renewed inflationary pressure. However, the oil price soon turned negative again, which observers explained with economic concerns and doubts about demand.
The temporary rise in the oil price may have contributed to the rise in yields on 10-year government bonds after they had fallen in recent months. However, market participants saw the main reason for the rising yields in the waning expectations of interest rate cuts. The dollar has now recovered after the recent sharp falls. Here too, investors have become somewhat more sober with regard to the Fed after last year's interest rate cut fantasy.
Moderna share price jumps
The market was led by the pharmaceutical sector, which had not taken part in last year's recovery and has now gained 1.8 percent. Shares in vaccine manufacturer Moderna jumped 13.2 percent after being upgraded to "outperform" by analysts at Oppenheimer. The shares had fallen sharply in 2023 as sales of Covid-19 vaccines slumped. However, Oppenheimer sees opportunities in other products.
A downgrade to "underweight" by Barclays pushed the Apple share price down by 3.6 percent. Tesla (little changed) was unimpressed by the fact that Chinese competitor BYD sold more e-cars in the fourth quarter of 2023 than the US manufacturer, which exceeded consensus expectations with its sales figures. Meanwhile, Rivian 's sales figures (-10.1%) were disappointing.
MiMedx Group fell by 10.3 percent. The biotechnology company received a warning letter from the FDA in connection with the classification of its product Axiofill. Axiofill will therefore probably have to be examined more closely before approval.
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The streets of Wall Street were filled with protesters during a rally against the interest rate hikes. The wall of uncertainty surrounding the future rate movements dampened the start of the year for many investors. Despite the year-long doubt about the necessity of last year's interest rate cuts, tech stocks saw significant sell-offs at the beginning of the new year.
Source: www.ntv.de
