Rate hike day in the US: Hope for further recovery

Wall Street on a rollercoaster ride

Trading on Wall Street in the evening was characterized by a high level of nervousness. Investors’ concerns about rapid interest rate hikes by the US Federal Reserve and the Ukraine crisis weighed on the stock exchanges. The standard value index Dow Jones closed with a discount of 0.2 percent at 34,297 points. However, it was able to break away from its daily low of 33,545 points. The broad S&P 500 lost 1.2 percent to 4,356 points, while the tech-heavy Nasdaq lost 2.3 percent to 13,539 points.

“Uncertainty is behind everything,” said Robert Pavlik, portfolio manager at Dakota Wealth. Equity trader Keith Temperton of brokerage house Forte Securities said most market participants have never seen a rate hike cycle. “All they know is a Fed pumping money into the markets, so this is a shock now.”

Tension ahead of the Fed’s appearance

The US Federal Reserve (Fed) is expected to prepare the financial markets for an imminent turnaround in interest rates this evening German time. At the end of the two-day monetary policy meeting, it will very likely leave the key rate in the range of zero to 0.25 percent. However, Fed Chair Jerome Powell has signaled that the loose stance will soon become obsolete in view of the rapidly rising prices. Several Fed officials have put March as the timing for a rate hike. The markets are expecting up to three further hikes in the current year.

Prices on the Asian stock exchanges also continued to fall. The Japanese Nikkei index lost 0.4 percent to 27,011 points by the end of trading. In the meantime it had fallen by one percent to its lowest level since December 2020. The Shanghai stock exchange was up 0.6 percent. The index of major companies in Shanghai and Shenzhen gained 0.5 percent.

The euro is hovering at 1.13

Tension is also rising on the currency market before the US Federal Reserve’s decision in the evening. The euro has been hovering around $1.13 in its range over the past few weeks. The common currency is currently trading at $1.1305. Oil prices remain at a high level, in the morning a barrel of North Sea Brent costs 87.08 dollars. The price of gold also remains stable, a troy ounce costs 1848 dollars.

Microsoft makes billions

The US software giant Microsoft reported a profitable quarter in the evening. The software giant increased revenue by a fifth year over year to $51.7 billion. Analysts had expected around $ 50.9 billion. The bottom line is that Microsoft earned just under $18.8 billion in the second quarter that ended in December – an increase of 21 percent. The cloud business was once again a growth driver. However, Microsoft shares temporarily fell by a good four percent in after-hours US trading.

Good prospects at TI

The chip group Texas Instruments (TI) increased sales in the past quarter by 19 percent to $4.83 billion thanks to strong demand from industry and car manufacturers. Overall profit jumped 27 percent to $2.14 billion. Here, too, market expectations were exceeded. Investors and analysts were also impressed by the company’s outlook.

Wacker deserves a lot

Of the German companies from the leading indices, Wacker Chemie from the MDAX presented its current business figures in the morning. At EUR 6.2 billion, group sales last year were around a third up on the previous year. The bottom line is that Wacker earned around 780 million euros in 2021, after 202 million euros in the previous year.

GM relies on electric cars

The largest US car company General Motors (GM) is investing 6.6 billion dollars in its locations in the US state of Michigan as part of its switch to electric cars. The group announced in the evening that the money should be used, among other things, for the conversion of a production line and the construction of a new battery factory. By 2025, GM plans to invest a total of $35 billion in its electric offensive.