Friendly waiting for Georgia: Wall Street makes up for a poor start to the year

Tuesday, January 05, 2021

Kindly waiting for Georgia
Wall Street makes up for a poor start to the year

The runoff election in Georgia will have a decisive impact on the freedom of future President Joe Biden to rule. Both a Democratic and a Republican majority in the US Senate would be advantageous for investors. On Wall Street, the vote is therefore relaxed.

On the day of the eagerly awaited runoff election for the two Senate posts of the US state of Georgia, investors held back with investments on Wall Street, but almost made up for the weak start to a US stock market year since 2016. An unexpectedly better purchasing managers' index for the manufacturing sector in December provided positive impetus. Stockbrokers are also likely to have heard that the US Federal Reserve, Loretta Mester, expects the central bank to continue its $ 120 billion monthly asset purchase program throughout the year, even if the economy recovers in the second half of the year.

Concerns about the corona pandemic were simmering somewhat in the background, although lockdowns are being tightened in some parts of the world. The clear winners were oil stocks, which were boosted by soaring oil prices. The Dow Jones gained 0.6 percent to 30,392 points that S&P 500 put that a tad clearer NasdaqIndexes by 0.9 percent.

The Oil prices were last 5 percent higher. The US variety WTI cost more than 50 per barrel at times – for the first time since the end of February 2019, when the corona pandemic hit the financial markets. On the one hand, the prices were driven by the fact that the Opec + countries agreed on only a slight increase in the reduced production volumes in February and March.

In addition, the tensions surrounding Iran caused price-driving speculation about a lower oil supply from the oil-producing country. According to its own statements, despite international criticism, Iran has achieved the announced enrichment of uranium to 20 percent. In addition, a US aircraft carrier is still in the Gulf region, according to the US administration because of new "threats" from Iran.

Look to Georgia

Many stockbrokers looked hopefully at the ongoing Senate runoff elections in the state of Georgia. "The election result will determine how much leeway future President Joe Biden has in implementing his program," said Matthias Scheiber, manager at Wells Fargo's wealth management company. If Biden's Democrats gain the upper hand in the Senate as well as the House of Representatives, experts expect additional government spending programs.

The analysts at ING Bank noted that this is raising the mood on the market. Investors' concerns about stricter regulation in the long term and rising taxes would take a back seat for at least a few months.

If the Republicans defend their majority on the other hand, they would block additional spending, the analysts at Rabobank predict. At the same time, however, they would force the central bank (Fed) to step into the breach to cushion the consequences of the coronavirus. Since they reject negative key interest rates, only additional security purchases remained.

China is pleased to back down

The titles of China Telecom, China Mobile and China Unicom rose by up to 13.5 percent. The New York stock exchange operator Nyse had abandoned its plan to exclude these shares from trading. Boeing recovered practically completely after the very weak start of the week by 4.4 percent while Coke fell a little further by 1.1 percent.

The sub-index of oil stocks in the S&P 500 index gained over 4.5 percent. In the Dow, chevrons rose 2.7 percent. Exxon was up 4.8 percent, Occidental Petroleum was 10.1 percent and Marathon Oil was up 9.1 percent.

That the ambitious joint venture in the company health care of Amazon, Berkshire Hathaway and JPMorgan Chase is terminated unsuccessfully, their courses moved only moderately. It should manage the health care of the more than 1.5 million employees of the three companies and reduce costs for the corporations. JPM lost 0.2 percent, Amazon was up 1 percent and Berkshire was down 0.4 percent.

Delta Air Lines gained 2.1 percent. Amazon is expanding its fleet of cargo aircraft and has acquired eleven aircraft from Delta Air Lines and Westjet Airlines.