Interest rate fears are omnipresent
Wall Street closes in the red again
01/19/2022 10:42 p.m
Inflation in the US drives stockbrokers. According to a market strategist, the main question now is how aggressively the central banks will react to the development. This causes ups and downs in the major indices. They all close in the red.
After the strong losses of the previous day, Wall Street closed again in the red in the middle of the week. The indices fluctuated between premiums and discounts over the course of the day, then slipped to the daily lows in late trading. The interest rate fears are omnipresent, it said. This was not changed by slightly lower market interest rates, which also recovered from the daily lows in late business and pushed shares down.
Recent volatility “is really all about inflation and how aggressively central banks are going to counter it,” said market strategist Brian O’Reilly of Mediolanum Asset Management. According to the expert, inflation can slow down economic growth because it dampens demand. the Dow Jonesindex dropped 1.0 percent to 35,029 points, S&P 500 and Nasdaq Composite lost 1.0 and 1.1 percent respectively.
Up to four interest rate hikes in 2022 by the US Federal Reserve were already a foregone conclusion, and the first stockbrokers did not rule out a fifth hike. Although the first increase is not expected until March, the US Federal Reserve’s meeting in the coming week has become increasingly important. For Invesco market strategist Kristina Hooper, inflation is the real drag on the market, regardless of the Fed’s reaction. “There is concern that (…) the Fed will not start normalizing monetary policy because it is so late.” The already high inflation fears were fueled by the ongoing oil price rally. Positive real estate data played no role.
Bank of America beats expectations
Quarterly results from Bank of America and Morgan Stanley beat market expectations. Bank of America had earned significantly more in the fourth quarter thanks to higher revenues and a release of risk provisions and exceeded earnings expectations. The share price rose by 0.4 percent. MorganStanley had increased earnings in the final quarter of 2021 more than expected. The bank benefited from higher revenues, mainly from wealth management and investment banking. The shares climbed 1.8 percent. Got into the banking sector U.S. Bancorp (-7.8 percent) under pressure. The bank presented mixed business figures. In trade, falling income and higher labor costs were criticized.
The US consumer goods manufacturer Procter & Gamble (P&G) posted another quarter of strong revenue growth despite higher prices. P&G had raised its revenue guidance for the fiscal year ended June 30 despite expecting higher costs. The company assumes that it can pass these on. The stock rose 3.4 percent.
unitedhealth (+0.3 percent) performed better than expected in the fourth quarter and full year 2021 and confirmed the forecast for the current year. SoFi Technologies shot up by 13.7 percent. The financial technology provider received a banking license from the regulators.
Dollars with light duties
the dollar gave back part of the previous day’s gains with falling market interest rates. The dollar index fell 0.2 percent. The ING analysts only saw a breather and are counting on rising prices. Rising energy prices are helping to raise expectations of monetary tightening, including from the Federal Reserve, which should boost the dollar, ING said.
the oil prices continued to rise to their highest levels in over seven years. The International Energy Agency (IEA) estimates that global oil demand will exceed pre-pandemic levels this year. The IEA also raised its growth forecast for oil demand in 2022. In addition, oil prices were supported by geopolitical tensions in the Middle East and between Russia and the West. Western threats against oil producer Russia in the event of an invasion of Ukraine have intensified. “Depending on the development, the price of oil can quickly reach the $100 mark,” said one market participant. However, if the crisis in Ukraine calms down, for example, a sharp decline is also possible.
the gold price increased significantly with falling market interest rates and the weak dollar – also fueled by concerns about inflation. In the trade it was said that these were hidden for too long. Gold and silver traded at their highest levels since November.