market report
Status: 11/22/2022 10:24 p.m
A little more confidence has settled in on Wall Street today. Corporate laggards took center stage with quarterly numbers. Concerns about China also came more into focus.
After a cautious start, the optimists on Wall Street ended up having the better end for themselves. The changeable trade, which last determined events, continued. In the end, the leading index Dow Jones managed to jump over the 34,000 point mark with an increase of 1.18 percent to 34,098 points.
Unlike recently, the interest-sensitive technology exchange Nasdaq was also able to keep up. The composite index gained 1.36 percent, while the Nasdaq 100 index rose 1.48 percent. The Nasdaq, in particular, had recently suffered more from the ongoing uncertain interest rate cycle of the US Federal Reserve (Fed). The market-wide S&P 500 index ended trading at 4,003 points, up 1.36 percent on the day.
Despite the advances today, the market lacks new impetus after the recent high gains. “Market sentiment remains subdued for the second trading day of the week as most investors are still struggling to assess the short- to medium-term prospects for risky assets,” said market watcher Pierre Veyret of broker ActivTrades.
In addition, US monetary authorities are curbing risk appetite, Veyret added. They recently confirmed that the fight against inflation is far from over. The Dow’s peak rise of 18.5 percent since mid-October is currently considered a heavy burden for the New Yorker
Economic threats from China
The situation in China also remains a risk for the stock market and the economic situation. Specifically, Beijing reported a record increase in corona cases on Tuesday. According to the authorities, 1,438 new infections were registered in the Chinese capital – more than ever since the pandemic began almost three years ago. On Sunday, the number of new cases was 621.
China is the last major economy to have a very strict zero-Covid policy. Lockdowns up to the sealing off of entire districts and cities and business closures due to small corona outbreaks are a burden on the economy and people’s everyday lives. The strategy, which initially proved effective in containing the corona virus, appears to be losing its effectiveness in the face of new virus variants.
Laggards in focus
On the corporate side, there were still a few laggards from the reporting season today – with ups and downs. The biggest positive exception was electronics retailer Best Buy, which surged 12.71 percent. A raised earnings outlook surprised investors positively at a time when the willingness to spend is generally being critically questioned.
Abercrombie & Fitch also made strong gains of as much as 21.65 percent: The textile retailer surprised positively by exceeding sales expectations in the third quarter. On the contrary, Zoom Video went down by 3.87 percent. The provider of video conferences is finding it increasingly difficult after the boom at the beginning of the corona pandemic, as the weakest growth of the company founded in 2011 shows. The effect of this is that the company also slightly lowered its full-year revenue guidance.
DAX without momentum
The domestic stock market is still in a consolidation phase. As in the past, the DAX traded within a narrow range of between 13,343 and 13,485 points. The fact that the leading German index ended trading with a daily gain of 0.29 percent to 14,442 points is primarily due to the Wall Street trend. In New York, the stock market has meanwhile turned positive after an inconsistent start, but is currently also caught in a sideways movement.
The interest rate policy of the US Federal Reserve (Fed) remains the dominant topic on the floor. How long and how strong will the Fed continue the current interest rate cycle? Markets are likely to continue struggling without a better idea on this question.
Especially since there is no trading in the USA on Thursday due to the Thanksgiving holiday and only shortened trading on Friday. The chart technology analyst Marcel Mußler therefore assumes that there could be further consolidation days on the stock exchange in this country.
Fed minutes in focus
As always, the stock market is already looking ahead, in this case to the minutes of the Fed’s last interest rate meeting, which is expected tomorrow from 8 p.m. Central European Time (CET). The protocols, known in technical jargon as “minutes”, are one of the few opportunities to take a look inside the world’s most powerful central bank and have often caused movement. However, whether this will also be the case on the eve of Thanksgiving is more than uncertain.
The courses have recently received support, among other things, from speculation about more cautious rate hikes by the Fed, from the surprisingly low increase in the US inflation in October was fueled. However, investors’ expectations are exaggerated, warned financial market expert Russ Mold from brokerage house AJ Bell: “A cold shower could follow tomorrow.”
euro is recovering
The euro rose on Tuesday. The common currency was able to make up part of the significant losses at the beginning of the week. It is trading at $1.0302 in US trade, higher than in the morning. The European Central Bank (ECB) set the reference rate at 1.0274 (Monday: 1.0246) dollars.
Market observers spoke of a counter-reaction after the weak start to the week. On Monday, indications of declining price dynamics in Germany caused the euro exchange rate to drop by around one cent. With the producer prices prices that manufacturers charge for their goods rose much more slowly than expected. This prompted market speculation that the ECB would be less aggressive in future rate hikes to combat high inflation.
However, current statements from the ranks of the ECB give reason to expect that the central bank will continue to provide consistent guidance in curbing high inflation. According to Bundesbank President and ECB Council member Joachim Nagel, inflation in the euro area has probably not yet peaked. In addition, the German inflation rate should remain high in the coming year.
Slight plus on the oil market
Oil prices extended gains in the afternoon, ending up around 1.3 percent. Nevertheless, the oil market remains ailing, not least because of the difficult corona situation in China. “The downward trend in the price of oil (Brent), which has been confirmed since summer 2022, is still relevant. Only a rise above the $111.20 area would end it,” comments Konstantin Oldenburger, market analyst at CMC Markets.
On Monday afternoon, a press report on the oil market caused a great deal of excitement and sharp price fluctuations. The Wall Street Journal reported that Saudi Arabia was discussing an increase in production with other OPEC countries. As a result, oil prices fell sharply. When Saudi Arabia denied the report a few hours later, oil prices rebounded to where they started.
Ascent and descent at Uniper
Uniper shares experienced a roller coaster ride. They gave up larger gains again in the afternoon, only to close in the end with little change. Recently, the papers had been in very high demand and had almost doubled. They have already more than tripled from the record low of EUR 2.55 in September. In the course of the gas crisis and the end of Nord Stream 2, they lost around 94 percent in 2022. The annual loss is currently more than 80 percent.
Europe’s utilities have recently shown strength. The main trigger was the clarity regarding British excess profit taxes for producers of renewable energy. According to stockbrokers, Uniper also helps that the German gas company VNG can apparently hope for state aid.
Financial investor Cevian sells most of its Thyssenkrupp package
The Swedish financial investor Cevian has largely parted with its stake in the industrial group Thyssenkrupp. “Yesterday, Cevian Capital reduced its stake in ThyssenKrupp to a remaining stake of less than one percent,” the investor said today on request. This is a decision that Cevian made as part of regular portfolio adjustments.
Tag Immo cancels dividend
The board of directors of the MDAX group Tag Immobilien announced that the company was suspending the dividend payment for 2022 to strengthen reserves. “Horrible! A company could not send a more negative signal,” commented the analysts at Alpha securities trading. The experts from Berenberg canceled the target price to EUR 11.50 from the previous EUR 17.50.
No more job cuts at Twitter?
According to a media report, Twitter’s new owner Elon Musk is not planning any further job cuts at the short message service. In fact, the company is hiring in marketing and technology, tweeted reporter Alex Heath from the technology portal The Verge. Immediately after the Twitter takeover in early November, Tesla boss Musk initially laid off around 3,700 employees.