Wall Street: finally a rebound?

(Boursier.com) — After the brutal purge of the past few weeks, Wall Street finally seems to be in better shape ahead of the stock market this Friday. The S&P 500 is expected up 1.2% and the Dow Jones up 0.9%, while the Nasdaq rebounds 1.8%. A barrel of WTI crude rose 1% to around $107. The ounce of gold stabilizes at $1,822. The dollar index lost 0.1% against a basket of benchmark currencies. Bitcoin jumped to $30,000, gaining 9% in 24 hours but dropping another 16% over a week.

Operators could therefore engage today in a ‘bargain hunt’, favoring the most massacred values ​​of the Nasdaq. However, the narrative has not really evolved. The Fed will have to tighten its monetary policy aggressively in order to fight effectively against inflation that is still extremely high, at the risk of further accentuating an already tangible economic slowdown.

On the economic front across the Atlantic this Friday the 13th, import and export prices for the month of April will be communicated at 2:30 p.m. (FactSet consensus +0.5% for imports compared to the previous month and + 0.7% on export prices). The preliminary index of US consumer sentiment for the month of May 2022, measured by the University of Michigan, will be revealed at 4 p.m. (consensus 64). The Fed’s Neel Kashkari and Loretta Mester will speak during the day.

Markets are seeing some semblance of encouragement from Fed Chairman Jerome Powell, reiterating his support for rate hikes of 50 basis points – still better than 75. The rebound comes amid outrageously bearish. Concerns persist regarding the economic slowdown, the prolonged period of rising inflation and the impact of tighter financial conditions remaining headwinds. The ongoing conflict in Ukraine and the Covid lockdowns in China also reinforce the sentiment that supply chain disruptions will take time to abate.

The latest reports on the Ukrainian conflict highlight limited Russian progress in the east of the country. Moscow has declared its intention to strengthen defenses along the Finnish border if it goes ahead with its plan to join NATO. Some EU countries are pushing to delay the ban on Russian oil so they can push for other sanctions instead. Operators also fear reprisals from Russia. Meanwhile, attention is also shifting to the jump in daily covid infections in Shanghai, which casts doubt on the timeline for easing restrictions. The PBoC will meet on Monday, but opinions are divided on whether China’s central bank will ease policy.