Thursday, September 23, 2021
Evergrande remains an issue
Fed gives Wall Street a boost
Encouraging statements from the US Federal Reserve are encouraging investors in the US stock market. The China Evergrande crisis continues to be closely monitored. The US software company Salesforce is one of the winners on Wall Street with a strong price increase.
Relief over the statements of the US Federal Reserve from the previous day brought Wall Street strong price gains on Thursday. Of the Dow Jones Index increased by 1.5 percent that S&P and the Nasdaq Composite gained 1.2 and 1.0 percent. The number of course winners with 2,150 (Wednesday: 2,679) again clearly exceeded that of course losers, which was given as 1,161 (673). 107 (101) titles went unchanged from the market.
The impending collapse of the Chinese real estate giant Evergrande lost its horror, even when it was reported from circles that China’s authorities had urged local governments to prepare for the possible collapse of the China Evergrande Group. Local governments should cushion the consequences.
On the previous day, Wall Street posted its biggest daily gain since July in the wake of statements by the Fed. Following its interest rate meeting, the US Federal Reserve signaled that it would gradually reduce its bond purchases from November (“tapering”) and raise interest rates in the coming year. However, it has not submitted a resolution or a timetable for this. In doing so, she has kept all options open to act flexibly. “The Fed statement is well received on the stock exchanges,” says market strategist Thomas Altmann from QC Partners. According to Altmann, tightening of US monetary policy can thus be postponed if necessary.
New economic data signaled that such a need could exist. In the past week, more Americans filed for first-time unemployment benefits than expected. In addition, activity in the US economy slowed in September compared to the previous month, as the purchasing managers’ indices calculated by IHS Markit for the manufacturing and service sectors showed. The indices were below expectations, but still in the expansive range.
Questions about Evergrande
The markets this week were dominated by China’s largest real estate developer. Many fear that the company’s collapse could affect the world’s second largest economy and affect global financial markets. The heavily indebted company has issued billions in bonds to international investors, many of which are trading at a fraction of their face value.
In the meantime, however, the fears seemed to have subsided. “The unanimous opinion is that the Chinese will ultimately control this,” said market strategist John Roe of Legal and General Investment Management. Whether and to what extent this will continue to apply cannot currently be foreseen.
An increase in the outlook helped Salesforce.com to an increase of 7.2 percent. The specialist for cloud computing solutions had raised its sales forecast for the current financial year 2021/22 and given a better outlook for 2022/23 than expected.
Safe havens – dollars, gold, bonds – were not in demand. The dollar fell after advancing in the wake of Fed statements the previous day. Participants saw a countermovement. Of the Dollar index lost 0.4 percent. Of the Gold price gave up intermittent gains and fell more sharply. the Oil prices gained in the slipstream of the stock market after benefiting from lower US oil stocks on Wednesday.