Investors bet on a soft landing for the US economy
In the US, the rise in the number of initial jobless claims is fueling hopes that inflation will be contained. Wall Street closes with small gains on the last trading day of the week. It is also worth taking a look at companies that are building or closing plants in Germany.
Wall Street closed with small gains on the last trading day of the week. In view of the rise of over 2,500 points in the Dow since the October low, investors became more cautious. The Dow Jones index closed 2 points higher at 34,947, while the S&P 500 and the Nasdaq Composite each rose by 0.1 percent. There were a total of 1,950 (Thursday: 1,086) price gainers and 916 (1,761) price losers. A total of 64 (89) shares closed unchanged.
Overall, hopes that the interest rate peak in the USA has been reached continued to provide support. This was manifested by the lower than expected inflation data over the course of the week. The stronger-than-forecast rise in weekly initial jobless claims the previous day further underpinned this.
Investors are also betting on a "soft" landing for the US economy. However, yields on the US bond market rose, particularly at the short end, after falling in early trading. The yield on ten-year paper was already quoted below the 4.40 percent mark at one point. In late trading, it was little changed at 4.44 percent.
Oil prices recover
"The main reason for the recent rally is that Wall Street is convinced that the Federal Reserve will not raise interest rates again this cycle. In fact, investors now expect the Fed to start cutting rates in less than six months," according to Crossing Wall Street.
The dollar gave up interim gains and was down. The dollar index fell by 0.5 percent. Analysts at Danske Bank are betting on the euro in the short term, believing it has the potential to reach 1.10 dollars within a month. They point to the recent weaker than expected US data. In the medium term, however, over a time horizon of six to twelve months, Danske expects euro exchange rates to fall, citing relative trading conditions, real growth prospects and the relative development of unit labor costs.
After the previous day's massive falls of almost 5 percent to the lowest levels in four months, oil prices recovered. WTI and Brent rose by around 4 percent. With regard to the previous day, UBS spoke of a combination of short selling and the fall through technical marks. However, there are still concerns about demand. The recovery at the end of the week could be due to speculation that Saudi Arabia will extend production restrictions into the new year due to the fall in prices, according to ING.
Investigations against Applied Materials?
Among the individual stocks, shares in Applied Materials fell by 4 percent, although the company exceeded market expectations in the fourth quarter and the outlook for the current quarter also exceeded expectations. However, according to media reports, the US Department of Justice has launched an investigation into the company's alleged delivery of equipment to a Chinese company without the necessary licenses.
Gap , on the other hand, saw its share price jump by 30.6 percent. The clothing retailer reported better-than-expected results and higher profit margins for the third quarter, which it said was due to easing pressure to cut prices. The full-year outlook was confirmed. Eli Lilly rose by 0.5 percent. The pharmaceutical group is investing 2.5 billion dollars in the expansion of production capacities in Germany.
Goodyear Tire & Rubber (-0.1%) is closing two production facilities in Germany in order to reduce production costs and improve its competitive position in the EMEA region. The plants in Fürstenwalde and Fulda are affected.
The Dow Jones index, which is a significant indicator of Wall Street's performance, closed 2 points higher on the last trading day of the week, reflecting a cautious optimism among investors due to the hope of a soft landing for the US economy. Despite the small gains, investors became more cautious as the Dow Jones had risen by over 2,500 points since the October low.
Following the small gains on Wall Street, there was a noticeable movement in the US dollar. In contrast to earlier expectations, the dollar gave up its interim gains and fell by 0.5 percent, as analysts at Danske Bank bet on the euro in the short term, citing weaker than expected US data.
Source: www.ntv.de
