Oil prices keep climbing
Stocks on Wall Street on a slight recovery course
03/02/2022, 10:45 p.m
Wall Street continues to react sensitively to the situation in the Ukraine war. Investors are positive about the negotiations between Russia and Ukraine announced for tomorrow. Statements by US Federal Reserve Chairman Powell also provide some relaxation.
The US stock exchanges have swung into a tight recovery course. Investors drew hope as a second round of talks between Russian and Ukrainian delegates was announced for Thursday, even as Russia continued to intensify its attacks on cities in Ukraine.
Tailwind also came from another direction. US Federal Reserve Chairman Jerome Powell announced a rate hike for the Fed’s interest rate meeting in two weeks in view of the sharp rise in inflation, but he spoke out in favor of an increase of just 25 basis points – also due to the difficult to assess consequences of the war in Ukraine. Recently, some central bankers had already fueled speculation about a larger interest rate hike in view of persistently high inflation.
Even before the starting bell, better-than-expected labor market data from the US private sector had sent another signal of persistent inflationary pressure. the Dow Jones Index ended the day up 1.8 percent and 33,891 points, practically making up for the severe losses of the previous day. The situation was similar for the other indices, which increased by up to 1.9 percent.
Massive countermovement in bonds
After their recent strong gains, bonds were initially no longer in demand given the new glimmer of hope in Ukraine as a safe haven. Accordingly, yields rose sharply again, by almost 17 basis points to 1.89 percent in the ten-year period. The announced interest rate hike in two weeks also contributed to this.
Also at gold there was a counter-movement. The precious metal fell $20, or 1 percent, to $1,925 as bonds rebounded as yields became more attractive as an investment.
the dollar initially continued to rise, but in the end it ran out of air and the dollar index was slightly in the red. The fact that the US Federal Reserve Chairman had spoken out in favor of a small interest rate hike also contributed to this. The Canadian dollar moved higher after the Bank of Canada raised interest rates by 25 basis points, as widely expected, due to high inflation.
Oil prices go up and up
Last but not least, the sharp rise in energy prices contributed to the continuing rampant concerns about inflation, and oil prices hardly knew how to hold back on Wednesday. US grade oil STI cost around 7 percent more and, at $110.60 for settlement, was the most expensive since 2011. The fact that the Russian invasion and the imposed sanctions are expected to result in a sharp drop in oil supplies from Russia also drove prices up.
The fact that weekly US oil inventories unexpectedly fell did not provide any additional impetus for price increases. The fact that OPEC+, as expected, stuck to the agreed further monthly increase in oil production by 400,000 barrels per day and did not react to the sharp rise in oil prices with a larger increase also had no effect. The fact that, according to the International Energy Agency, countries such as the USA and Germany now also want to release part of their strategic oil reserves has not slowed down the rise in oil prices either.
HPE very firm after strong numbers
Among the individual values on the stock market were Hewlett Packard Enterprise (HPE, +10.3%) looking for strong first quarter results. Salesforce.com exceeded its own targets in the fourth quarter, but the outlook for the first quarter and the year as a whole was rather mixed. The course rose by 0.7 percent.
The retailer Ross stores (6.1 percent) delighted investors with surprisingly strong figures and a dividend increase. As a mixed were the numbers from First Solar judged. The stock fell more than 8 percent after rising sharply in the previous days on the back of skyrocketing energy prices.
north current reacted to the presentation of the quarterly report with price fireworks of around 38 percent and, above all, to a much better than expected profit outlook for the department store operator. Competitors’ shares Macy’s and Kohl’s increased in this wake by 6.8 and 3.9 percent respectively.
Citigroup With an increase of 1.7 percent, they lagged somewhat behind the banking sector, which was very solid thanks to the renewed rise in market interest rates (3.0 percent). The bank wants to achieve profitability of 11 to 12 percent in the next three to five years. Evercore ISI analyst Glenn Schorr commented, “It’s all easier said than done.”
The daily winners were semiconductor stocks with a sub-index plus of 3.2 percent after US President Joe Biden emphasized the importance of the US semiconductor sector in his State of the Union address.