Buyers dominated US stock markets. China gives the impression of helping the ailing economy. Germany’s economy is proving to be reasonably robust and there are also signs of life from the USA. The latter probably justifies further action by the Fed against inflation.
After stabilizing the previous day, the US stock markets went up again. Overall good economic data encouraged investors to buy. The topic of interest rates remained dominant, however, because the annual meeting of central bankers in Jackson Hole has begun. However, US Federal Reserve Chairman Jerome Powell will not speak until Friday, he is likely to make rather hawkish statements, which should not be to the liking of equity investors. “The jitters that gripped indexes earlier in the week have been contained. Expectations that the US Federal Reserve will continue to hike interest rates to fight inflation are already priced in to some extent,” he said Market analyst Susannah Streeter of Hargreaves Lansdown.
The Dow Jones index rose 1.0 percent. The broader S
The Fed’s expected hold on rate hikes was supported by recent data. US GDP for the second quarter saw an upward revision that was only a hair’s breadth more moderate than expected. However, the increase in the GDP deflator was more meaningful. “The Fed looks at it, and a rise here – no matter how small – just doesn’t justify a more dovish stance on inflation,” said one trader. Private consumption, which is so important for the US economy, also remains strong. And last but not least, the weekly labor market data, which was better than forecast, spoke for a hawkish course by the Fed.
Market observers therefore looked for buying arguments on the stock market and found what they were looking for in China and Germany, the second and fourth largest economies in the world. China has announced a series of measures to support the flagging economy. And in Germany, both GDP data and the Ifo business climate index were better than expected.
The dollar fell on announced stimulus in China but regained some ground on US data. Hopes that the economy would recover in China weighed on the greenback – the dollar index fell 0.2 percent. The sharp rise in yields over the past few days has attracted buyers to the bond market.
Oil prices fell more significantly later on, which observers explained with the fear that Iranian oil could soon come onto the market again if an agreement is reached in the nuclear dispute with Tehran. Previously, the growing willingness of oil-producing countries to cut crude oil production in order to stabilize the market had been supportive. Bruno Jean-Richard Itoua, current president of the Organization of the Petroleum Exporting Countries (OPEC), also supports Saudi Arabia’s proposal.
Among individual stocks, graphics processor manufacturer Nvidia more than made up for initial losses and closed 4.0 percent higher. In the second quarter, the company met the consensus estimates on the market, albeit just about, but at the same time Nvidia again warned that the sales expectations circulating in the current quarter will probably not be achieved. However, some analysts are convinced that Nvidia should soon have bottomed out; that gave the stock a boost.
Salesforce lost 3.4 percent. Although the software company exceeded expectations with sales and earnings in the second quarter, it lowered its forecasts for the current financial year. The fact that Salesforce announced a share buyback with a volume of ten billion dollars fades into the background.
It’s different with the cloud-based software company Snowflake: Here, quarterly sales significantly exceeded expectations, and the outlook – although conservative according to the company – was positive. The fact that the quarterly loss was extended does not seem to bother us, the share shot up by 23 percent. The business figures of the software company Autodesk were also well received. NetApp gained 7.9 percent. The data storage expert provided an upbeat outlook alongside increased profits and sales for the quarter.
Splunk, on the other hand, fell 12 percent after the data platform expert lowered its outlook for 2023 recurring revenue. Also according to quarterly figures, Victoria’s Secret fell 2.1 percent, while clothing chain Guess fell 0.4 percent.
Citigroup is giving up its retail business in Russia. The US bank announced that it would wind up the subsidiary there. A previous sale had failed because of sanctions against the Russian financial system. The fitness group Peloton Interactive made a loss of more than $ 1.2 billion in the most recent quarter – the course rushed down 18.3 percent.
