Oil prices go up a bit
Interest rates and good guidance drive US stocks
03/03/2023 10:58 p.m
The US stock markets are in good shape going into the weekend. Yields in US bond trading are falling again and good indicators from Asia and Europe are helping the Dow Jones Industrial to rise by 1.2 percent. Meanwhile, oil prices are temporarily under pressure due to a media report.
Significantly falling yields on the bond market gave Wall Street a strong plus at the end of the week. The 10-year yield fell 9.7 basis points to 3.96 percent, slipping back below the 4 percent mark this week for the first time since November. The latest statements from Fed members and US economic data were also in focus.
The activity in the service sector determined by ISM weakened in February, albeit not as significantly as expected. In addition, the index is still well above the expansion threshold of 50, which indicates a robust economy. Business activity in the US service sector also fits into this picture. According to a survey by S&P Global, it was more lively in February than in the previous month.
“Inflation in the service sector will ease at a slower pace, but still high price pressures combined with ongoing tightening jobs means the Fed’s job of getting inflation back on a sustainable path to 2 percent is not over yet.” , say Wells Fargo’s Tim Quinlan and Shannon Seery. “Trading has become very choppy as economic data has become more problematic and interest rate expectations have changed,” added Craig Erlam, senior market analyst at Oanda.
The Dow Jones Index gained 1.2 percent to 33,391 points. The S&P 500 rose 1.6 percent and the Nasdaq Composite increased by 2.0 percent. The 2,468 (Thursday: 1,654) price winners faced 606 (1,416) losers. 87 (111) titles closed unchanged.
The dollar weakens as yields fall
The statements made by the members of the US Federal Reserve are also different at the moment. Atlanta Fed President Raphael Bostic indicated on Thursday that he would support an interest rate pause in the summer. Conversely, Fed Governor Christopher Waller said he would hike rates beyond the projected target until US job creation slows at the rate seen over the past year and consumer price inflation falls noticeably subside.
As yields fell, so did the dollar. The dollar index lost 0.5 percent. In return, the euro rose well above the $1.06 mark again. According to Commerzbank analyst Esther Reichelt, because the ECB interest rate expectations have already gone a long way, they could turn from being a support factor to a brake on the euro. The market sees the high point for the key interest rate at just under 4 percent (currently 2.50%). The current market expectations are considered “rather aggressive”. Much of the emerging upside risk to inflation is likely already priced into the interest rate outlook, limiting the upside potential for the euro. This was also shown by the euro’s restrained reaction to the February inflation data from the euro zone.
According to a media report, oil prices are under pressure
On the oil market, prices came under pressure for a short time. The Wall Street Journal reported a “growing division” within OPEC. The United Arab Emirates (UAE) are considering withdrawing from the cartel. The reason for this is growing tensions between the UAE and Saudi Arabia, the newspaper reported, citing representatives of the Emirates. However, other news agencies, including Reuters, which also cite unnamed sources, reported that this was not the truth. This caused oil prices to recover. In addition, the number of active oil rigs in the US fell to its lowest level in six months last week. The prices for Brent and STI increased by up to 2.1 percent.
The sagging dollar and falling market interest rates supported that gold price. The troy ounce rose 1.0 percent to $1,855.
Broadcom gains positive outlook
were on the corporate side Hewlett Packard Enterprise in view after the company surprised positively with the figures for the first fiscal quarter and the outlook. After a strong plus at the start, the course fell by 1.4 percent. Dell fell by 0.9 percent. While the company also performed better-than-expected for the quarter, the computer maker’s outlook disappointed.
At Broadcom (+5.7%) business figures and outlook were both just above market expectations. For the Teslashares were up 3.6 percent. Deliveries in China increased by 13 percent in February compared to the previous month.