Euro falls to 20-year low
Accounting season puts US stock markets under pressure
07/11/2022, 10:20 p.m
With their quarterly figures over the course of the week, the major US banks are preparing for economic growth in the USA. Investors on Wall Street are correspondingly nervous. On Twitter and Rivian, other reports caused a price drop.
The forthcoming accounting season is casting its shadow. Fearing disappointing earnings figures as a result of rising inflation, US investors sold shares at the beginning of the week. Especially the tech-heavy ones Nasdaqindex fell and fell 2.2 percent to 11,860.28 points. Of the Dow Jonesindex of defaults was down 0.5 percent 31,195.60 points. The broader one S&P 500 dropped around 1.1 percent to 3,859.89 points.
big banks like JPMorgan, Citigroup and Morgan Stanley are due to report their results later this week, which investors will scrutinize closely for signs of a slowdown in economic growth. The S&P 500 bank index fell around one percent in the run-up to the start of the week. Analysts expected rising loan loss provisions to have impacted second-quarter results for major US banks.
“People are concerned not only that earnings will be weak due to an economic slowdown, but also because of the strengthening US dollar creating headwinds for multinational companies’ earnings,” said Robert Pavlik, portfolio manager at Dakota Wealth Management. While banks are benefiting from rising interest rates, they are also being hit by weakness in M&A and advisory businesses.
The mix of rising interest rates in the USA and fears of recession, especially in Europe, drove the Dollar index, meanwhile, at a 20-year high. Of the Euro peaked at 1.3 percent to as high as $1.0045, flirting with parity to the dollar. “We expect the euro-dollar exchange rate to break through parity soon, and it may well move a bit above that level,” said Jonas Goltermann, economist at Capital Economics. With US inflation data likely to mark a new high for the year and the US Federal Reserve likely to continue to aggressively hike interest rates, risks are skewed in favor of the dollar.
The individual values were the shares of Twitter in the spotlight after Tesla CEO Elon Musk canceled his deal to buy the social media company. The shares collapsed more than ten percent at the top. “As Twitter looks to take legal action against Musk, the stage seems set for a chaotic legal battle,” said investment strategist Michael Hewson of brokerage firm CMC Markets. Musk called off the $44 billion deal on Friday, partly because of a dispute over the number of fake user accounts. Twitter wants to take action.
Rivian probably wants to cut jobs
papers from Rivian Automotive fell 7.4 percent in response to a media report that the electric car maker plans to cut 5 percent of its workforce. The company currently employs around 14,000 people. The Bloomberg news agency reported that areas in which Rivian had grown too quickly would be particularly affected by the layoffs. These include “non-production functions” and teams whose areas of responsibility are doubled, according to the agency, citing informed people who asked for anonymity. However, a final decision has not yet been made. Rivian declined to comment on the report.
US investors were also concerned about the rising number of corona infections and the emergence of a new omicron sub-variant in Shanghai. Stockbrokers again feared restrictions in the economic metropolis. The corona-related closure of the casinos in the Chinese gambling metropolis of Macau is affecting casino operators. The shares of Melco, MGM, Las Vegas Sands and Wynn fell between three and eleven percent.