Monday, November 1st, 2021
Harley-Davidson with a tailwind
Dow scratches at 36,000 points
Thanks to an encouraging balance sheet season, Wall Street is in a record mood at the start of the month. While the Dow is scratching an important point, the Nasdaq is shooting to a new all-time high. The settled customs dispute between the US and the EU also gives Harley-Davidson a boost.
Wall Street closed with slight premiums after a volatile business. At the beginning of trading, the major stock indices marked record highs – the Dow jumped above the 36,000 mark for the first time. Subsequently, profit-taking began with partly moderate economic data. In the late stage of business, the turning point turned positive again.
Ultimately it rose Dow Jones Index by 0.2 percent to 35,914 points, S&P 500 and Nasdaq composite gained 0.2 and 0.6 percent respectively, with the latter closing at an all-time high.
The reason for the overall good mood was the encouraging balance sheet season. Of the S&P 500 companies that have reported so far, 82 percent exceeded expectations. Many companies also reported continued high demand. In doing so, they alleviated fears among investors who had worried about private consumption, which is so important for the US economy, due to supply bottlenecks and rising prices.
“I don’t see too much concern creeping into the market and that’s because the accounting season is pretty strong and most companies are in high demand,” said Principal Global Investors’ market strategist Seema Shah. Support also came from the agreement in the customs dispute between the US and the EU. Prominent beneficiaries were Harley-Davidson, shares rose 9.1 percent after the EU lifted punitive tariffs on US motorcycles. The dispute over Boeing and Airbus subsidies had already been settled in June, but lifted Boeing by 3.6 percent.
Meanwhile, the economic data provided light and shadow: The purchasing managers’ index for industry, which was compiled by IHS Markit, fell more significantly than expected. The ISM purchasing managers’ index for the manufacturing sector also fell, albeit less clearly than feared. Both purchasing managers’ indices were, however, well within the expansive range. In the meantime, however, construction spending was disappointing.
Moderna on the losing side
Otherwise, the accounting season went into a new round with figures from – among other things – Trivago (unchanged) and ON Semiconductor (+ 14.3%). At Trivago, the outlook slowed, because the hotel rating portal did not yet expect a complete recovery in travel activity for the winter. ON Semiconductor had clearly exceeded profit expectations.
PG&E on the other hand fell by 1.6 percent. The utility had slipped into the red due to fires and costs in connection with its bankruptcy according to Chapter 11. Novavax jumped 15.8 percent. The company’s Covid-19 vaccine had received emergency approval in Indonesia. The company also made progress in Canada.
at Moderna (-2.3%) there was less good news. The US health authority FDA postponed the decision on the application for approval of the corona vaccine for adolescents. Tesla rose by 8.5 percent, the electric car manufacturer had signed a new supply contract for batteries.
Investors are waiting for the central bank announcement
In the US bond market, we had to wait and see, not much happened. Investors were preparing for the Federal Reserve to announce the gradual reduction of its bond purchases on Wednesday, it said. After the Canadian central bank raised the possibility of an interest rate hike as early as April 2022 last week, players waited eagerly to see whether the Fed would also announce interest rate hikes at an earlier point in time than previously expected on the market.
“The market is very concerned that inflation is a far bigger problem than central banks wanted to admit in the middle of the year and that they are entering a period of inflationary control,” said Shah.
Of the Dollar index lost 0.3 percent after its Friday rise. The tightening of monetary policy in the USA has already been largely priced in, and there have recently been significant adjustments, it said. Of the Euro stabilized after its setback from the end of the week. In the opinion of ING, the single currency is likely to suffer particularly if the US Federal Reserve starts to reduce its stimuli, while at the same time the ECB is unlikely to increase interest rates in 2022, according to the market.
Of the Oil price was supported by the expectation that supply would remain tight. The players in the oil market expect that the Opec + countries will hesitate to increase production volumes at their conference this week, despite the tight market.
Of the Gold price recovered from its slide towards the end of the week, supported by the weak dollar, but remained below the important market of $ 1,800 a troy ounce. With the expected tightening of monetary policy, the bears should retain the upper hand in the short term, despite the high inflation, according to analysts.