Dollar index falls slightly: Wall Street is tackling the inflation shock to some extent

Dollar index falls slightly
Wall Street is to some extent weathering the inflationary shock

Another surge in inflation in the US is stoking investor concerns about higher interest rates and a collapsing economy. The US indices lost a lot of feathers after the latest figures were announced, but recovered a bit during the day. Airline stocks are under pressure.

Share prices on Wall Street closed slightly lighter, but clearly recovered from their daily lows on Wednesday. The shock of the unexpectedly strong increase in consumer prices quickly subsided. The market has been speculating that the June price hike may indeed have peaked and will taper off thereafter. Reference was made to the recent significant drop in oil prices. Wages are also increasing more slowly, it said. the Annual consumer price inflation rate was frightened at first. An increase to 8.8 after 8.6 percent was expected, but inflation in the USA actually reached a value of 9.1 percent. This was the first time since 1981 that there was a 9 before the decimal point. The core rate was also above forecasts.

Of the Dow Jones Index ended trading 0.7 percent lower. Of the S&P 500 fell 0.4 percent. Of the Nasdaq Composite reduced its minus to 0.2 percent. Market participants reported bargain buys in technology stocks.

Even marginally higher inflation figures would have underpinned the prospect of a brisk pace on the part of the US central bank in fighting inflation. Now the readings may even point to an even tighter monetary policy from the Fed. In view of this prospect, fears of a recession on the stock market are increasing because the hoped-for “soft landing” of the economy is becoming increasingly unlikely. “There should be little doubt that key interest rates will be increased by 75 basis points this month,” it says in the trade. However, the camp of those who even expect an interest rate hike of 100 basis points is growing: if such a step was priced in at 7.6 percent on Tuesday, it was already 42 percent on Wednesday.

Delta Airlines descending

Delta Airlines 28.64

With rising interest rate expectations, the banking sector lost 1.4 percent, although higher interest rates are benefiting the institutes’ business model. But fears of a recession are now outweighing it, it said. Among the individual stocks fell Delta Airlines by 4.5 percent. The airline missed market expectations on the profit side in the second quarter. However, sales beat forecasts and came in above pre-pandemic levels. The course of the industrial outfitter fasting fell 6.4 percent. Although dealers spoke of solid second-quarter figures, the sales development was disappointing. In addition, market participants feared a bleak demand trend due to high inflation.

Of the dollar came back slightly after an interim increase, despite the increasing speculation about interest rates. The dollar index fell 0.1 percent, but remained at a 20-year high. Of the Euro recovered easily. Of the Canadian dollar attracted meanwhile to its US counterpart. While there has only been speculation about a 100 basis point interest rate hike by the US Federal Reserve, the Bank of Canada already took this step on Wednesday. The Canadian dollar was trading at just over US$0.77 in late trade. The daily low before the interest rate decision was 0.7658.

Canadian Dollar / Euro
Canadian Dollar / Euro ,77

Recession worries dominated the bond market, which was reflected in a clearly inverted yield curve. The fears of a recession associated with interest rate speculation did not put a lasting brake on oil prices. Because these had already made a rapid descent on Tuesday, with the prices for the varieties STI and Brent dropped below 100 dollars a barrel, so that there was now a small countermovement. WTI was up 0.5 percent at settlement and Brent was up 0.1 percent. The significantly increased oil reserves in the USA are no longer a burden either.

Gold prices, meanwhile, recovered as the dollar weakened slightly. The precious metal was probably sought after against the background of the uncertain economic prospects.

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