Blackberry soaring: US investors look forward to Fed meeting

Monday, January 25, 2021

Blackberry is flying high
US investors look forward to the Fed meeting

At the start of the week, Wall Street shows two faces. While the Dow drops, the S & P-500 goes up. Many investors are already looking at the Fed meeting on Wednesday. Meanwhile, Blackberry is experiencing an unexpected soaring.

The US stock exchanges have shown themselves to be split in two. The Dow Jones Index gave up 0.1 percent to 30,960 points, the S&P 500 gained 0.4 percent. Technology stocks held up better, which, according to statements from trading, were supported by optimistic expectations for the current balance sheet season. For the Nasdaq composite it went up 0.7 percent; shortly after the starting bell, the index had set a new record.

Investors were already looking at the meeting of the US Federal Reserve that was due to take place mid-week. Here it is hoped that positive statements will be made regarding the Fed's sustained loose monetary policy. The US government is also expecting further support measures for the US economy, which has been hit by the corona pandemic. The pandemic, which is still rampant, weighed on sentiment.

In addition, the reporting season is increasingly coming into focus. More than a fifth of the im S&P 500 index listed companies and a third of the values ​​of the Dow Jones index will publish their business figures this week. Including heavyweights in the technology industry such as Apple, Microsoft, Facebook and Tesla. The technology giants in particular are considered to have benefited from the corona pandemic.

"How management communicates its outlook will be critical to markets," said Sophie Chardon, cross-asset strategist at Lombard Odier. "Investors will have to weigh the possibility of vaccinations against the reality of new lockdowns" – and its consequences for any company.

Meanwhile, economic activity in the USA picked up in December. The Chicago Fed National Activity Index (CFNAI) rose to a level of plus 0.52, according to the Federal Reserve Bank of Chicago. For November the index level was revised to plus 0.31, after initially a value of plus 0.27 had been stated.

Gamestop share continues to gain ground

The US pharmaceutical company Merck & Co has stopped developing its two experimental Covid-19 vaccines. Early clinical study data had shown that the vaccinations only generated disappointing immune responses against the virus, the company said. The company now wants to focus on the further development of two experimental drugs for the treatment of Covid-19. The share closed 0.2 percent higher.

Johnson & Johnson increased by 1.5 percent. The US pharmaceutical company expects data from the phase 3 study of its Covid 19 vaccine in the coming days. They are designed to provide information about whether the vaccine is effective as a single dose. This would give it a significant competitive advantage over those of Biontech / Pfizer and Moderna, both of which require two doses each. Emergency approval in the USA could be possible as early as February. Biontech and Pfizer rose by 2.0 percent each.

Moderna climbed 12.2 percent. The company announced that its corona vaccine had been shown to be effective against coronavirus variants in laboratory tests. Due to a weaker immune reaction, however, a booster vaccination is to be developed that is aimed at the variant that first appeared in South Africa.

The shares of Game stop jumped 18.1 percent after shooting up on Friday. The increase has been explained with bullish market participants scrambling to drive up value on the popular social platform Reddit.

With unusually lively sales, the one that had been in great demand in the past few days shot up BlackberryShare up 28.4 percent. The rally had no cause for information. At the request of the Canadian Investment Industry Regulatory Organization of Canada, Blackberry announced that the company was not aware of any business developments or events that could explain the price increase or the high turnover in the stock.

Ifo index weighs on euros

That was evident in the foreign exchange market Euro somewhat weaker after the Ifo business climate index fell more sharply than expected in January. The common currency was trading around $ 1.2140 in late US trading after $ 1.2176 on Monday morning. The dollar index rose 0.2 percent, which market participants explained with the reputation of the US currency as a safe haven in times of crisis. Currency expert Lee Hardman from MUFG believes that a dollar recovery is still premature, with speculation on a more restrictive US monetary policy. Instead, he initially sees room for improvement this year. "The Fed is unlikely to begin slowing the pace (of quantitative easing) until next year," he says.

The Oil prices initially shuttled back and forth, only to pick up more clearly in late business. This was supported by the fact that oil producers had signaled that supply was still short for the time being. Iraq is reportedly planning to cut its output in return for exceeding its quota last year. It was also said that some important Libyan ports were holding oil exports in disputes over payment. The price for a barrel of the US grade WTI rose 1.0 percent to $ 52.77, Brent rose 0.8 percent to $ 55.88.

The Gold price did not benefit from reawakened investor risk aversion and was little changed at $ 1,855. Observers pointed to the stronger dollar, which made the precious metal more expensive for buyers from other currency areas. US bonds were wanted due to pandemic concerns and in anticipation of the Fed meeting on Wednesday. The yield on ten-year paper fell by 5.7 basis points to 1.03 percent as prices rose.