Thursday May 13th 2021
Bitcoin sell-out
Dow Jones recovered after three days
Encouraging US labor market data lured investors back to Wall Street. While the fears of a shift in the US Federal Reserve are being reduced somewhat, Tesla boss Musk is now frightening cryptocurrency investors with a U-turn.
After three days of losses, Wall Street bounced back this Thursday. The day before, unexpectedly strong increases in consumer prices had sparked speculation about an imminent swing of the US Federal Reserve towards a tighter monetary policy. These fears have now been somewhat reduced. The producer prices were also well above the forecast, but this time the deviation was smaller. At the same time, the number of initial claims for benefits from the US unemployment insurance fell in the past week.
The Dow Jones index rose 1.3 percent to 34,021 points. The S&P 500 gained 1.2 percent. The technology-heavy Nasdaq composite gained 0.7 percent. For 2,293 (Wednesday: 462) course winners at Nyse there were 1,086 (2,913) losers. 95 (90) titles went unchanged from the market. Chief economic strategist Kent Engelke of Capitol Securities Management spoke of a “nice little break”. But the concerns about high inflation cannot be put out of the market anytime soon.
The US Federal Reserve has signaled several times that it is in no hurry to tighten monetary policy because a stronger rise in inflation is likely to be of a temporary nature; However, there are increasing voices that describe the level reached as so high that it could call the central bankers to the scene. In April consumer prices were up 4.2 percent year-on-year, well above the central bank’s target of 2.0 percent.
The problem for share prices in this environment is that their valuations are high overall, says Unigestion’s investment expert Salman Baig. When faced with higher inflation, future earnings expectations would have to be adjusted. Investors are therefore likely to keep looking for investment opportunities that were spared from this storm. In addition, the rising interest rate makes refinancing more expensive for companies. This particularly affects the technology sector with its high proportion of debt.
The aircraft manufacturer Boeing (+0.8 percent) has received the green light from the US aviation security authorities to solve a problem with the electrics of its 737 Max, as the company and a representative of the FAA announced. This paves the way for airlines to get the machines back into operation within a few days. Google has to pay a fine in the millions in Italy. The antitrust authorities announced that they would fine the Internet giant for abuse of its dominant position with a fine of more than 100 million euros. The share of Google parent Alphabet (+1.3 percent) was unimpressed by this.
Alibaba sagged 6.3 percent. The “Chinese Amazon” received a cartel penalty payment in the billions from the government in Beijing and has therefore reported a quarterly loss. Ford Chairman Bill Ford has announced the resumption of dividend payments. The share price rose 1.9 percent. Vroom increased 2 percent. The online used car dealer had posted a smaller loss in the first quarter than expected on the market. The significant increase in sales exceeded forecasts.
McDonald’s wants to pay more for its staff. Over 36,000 hourly employees will receive an average of 10 percent more in the coming months. The reason is the shortage of labor in the USA. The share gained 0.8 percent. Sonos (+7.4 percent) posted a profit for the second fiscal quarter after a loss in the previous year. In addition, the provider of audio entertainment electronics increased its sales outlook. Poshmark slumped 22 percent after the second-hand fashion retailer reported a higher loss for the first quarter than last year.
The dollar was little changed after its rally the previous day. On Wednesday, it benefited from speculation about tighter US monetary policy. Bitcoin was once again turbulent. During the night, it fell below $ 46,000 and is currently around $ 48,000, after $ 54,800 on Wednesday evening and 57,500 in the previous day’s high. The background is that Tesla boss Elon Musk has stopped the payment option with Bitcoin because of the high power consumption for climate protection reasons.
Oil prices fell significantly after hitting a two-week high most recently. Participants saw the losses in connection with the Colonial Pipeline Co. pipeline, which was hit by a hacker attack and whose operation is now set to resume after a suspension. With the weaker prices, the stronger dollar is likely to play a role as well. It makes the oil more expensive for buyers from the non-dollar area. On the bond market, the US ten-year yield is currently 1.66 percent, after having risen by 8 basis points to 1.70 percent the previous day. At the beginning of the year it was still 0.95 percent.
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