Wall Street on course for recovery
Corporate balance sheets bring relief to US investors
08/03/2022 10:49 p.m
Following the visit to Taiwan by US House Speaker Nancy Pelosi, there is relief on Wall Street at China’s comparatively moderate reaction. In addition, economic data ensure good mood. Paypal papers are particularly in demand.
Investors returned to Wall Street on Wednesday, buoyed by encouraging corporate results. The Dow Jones gained 1.3 percent to almost 32,813 points. The tech-heavy Nasdaq advanced 2.6 percent to 12,668 points and the broad-based S&P 500 gained 1.6 percent to 4,155 points.
Investors also reacted with relief to the relatively moderate reaction of the government in Beijing to the visit of US politician Nancy Pelosi to Taiwan, said Naeem Aslam, chief market analyst at brokerage firm AvaTrade. But China will hardly let the matter rest. The People’s Republic regards Taiwan as a breakaway province.
Strong US economic data also boosted sentiment. The purchasing managers’ index for the US services sector rose surprisingly. The growth in orders received by US industry was greater than expected at two percent. “Growth worries should tend to decrease against this background,” said Helaba economist Ulrich Wortberg.
In this context, investors withdrew from what were considered safe US Treasury Bonds return. This drove the yield on 10-year bonds to 2.774 percent. Amplified ahead of selling pressure by leading US Federal Reserve officials who said a further 0.75 percentage point rate hike in September was a possibility. Analysts at Mitsubishi UFJ bank appear to have gone too far for the Fed over recent speculation that the pace of interest rate hikes would slow.
The price for the US variety went down on the crude oil market STI on a roller coaster ride. According to an OPEC+ document, the export cartel agreed to increase production quotas by 100,000 barrels per day. “It’s so little it’s meaningless,” said Raad Alkadiri, manager at consultancy Eurasia Group. As a political gesture to US President Joe Biden, who had insisted on a significant expansion of production, it was almost an insult. However, a surprise rise in US inventories ended the interim WTI rally. By the evening, the price of the oil had dropped by three percent to $91.52 a barrel (159 liters).
At the companies stood out PayPal with a price increase of almost 14 percent to $ 101.95. This is the biggest price jump in more than two years. The payments processor had raised its profit targets on the back of surprisingly strong quarterly results and in response to the entry of hedge fund Elliott. Together with the savings and the share buybacks, the papers would have bottomed out, predicted analyst Christopher Brendler from the research house DA Davidson. Therefore, he reiterated his buy rating and price target of $120.
There were beaming faces too Tupperware. The fresh-keeping box maker made quarterly earnings of $0.41 per share — twice what it expected. Sales also surprised positively at $340.4 million. The company’s shares then rose by up to 65 percent and posted the second-biggest jump in the company’s history.