Tuesday, December 7th, 2021
Wall Street remains in a rally mood
Investors reach for every straw
The buoyant rebound in Wall Street stock prices from the beginning of the week continues. Concerns about the economic consequences of the spread of the new Corona variant Omikron are also continuing to decline. But the upswing is extremely fragile, traders warn.
The previous day’s rally on Wall Street continued unabated. The hopes of an improvement in the corona situation again ensured strong profits. Investors seemed to have buried the fear of the Omikron variant, it said in the trade. The Dow Jones Index gained 1.4 percent to 35,719 points, the S&P 500 and Nasdaq Composite climbed 2.1 and 3.0 percent, respectively. To 2,558 (Monday: 2,523) course winners fell and 837 (873) losers. 93 (105) titles closed unchanged.
Investors reached for every straw in the corona pandemic, because there was not much new compared to the previous day. The pharmaceutical company Glaxosmithkline had announced that preclinical studies had shown that its monoclonal antibody sotrovimab remained active against the omicron variant. The titles of the cooperation partner Vir Biotechnology rose by 12 percent. And the EU had approved Roche’s “Actemra” for the treatment of severe Covid-19 courses. “Part of the boom is undoubtedly due to growing optimism about the Omikron variant, which appears extremely contagious but not extremely dangerous,” said BDSwiss Holding analyst Marshall Gittler.
Some traders tried to explain the premiums an early year-end rally. One looks for reasons to buy. “We are at a stage where investors are looking for every piece of news they can find (…),” said market strategist Hugh Gimber of JP Morgan Asset Management. US productivity and trade deficit data were irrelevant; positive data from China provided some support.
Unpredictabilities increase
But the upswing was extremely fragile. Any negative headline about the corona situation could upset the mood, warned traders – also with a view to other possible stress factors. In the Ukraine conflict, US President Joe Biden threatened Russian President Vladimir Putin with severe economic sanctions if Russia attacked Ukraine. The Russian troop deployment on the border with Ukraine had fueled corresponding fears.
Oil prices continued to rise sharply – to their highest level in almost two weeks. The greatest worries about the Omikron variant of the corona virus, which would have triggered the recent price crash, have evaporated, according to Commerzbank. The fact that the nuclear talks with Iran stalled also had a price supportive effect. USA imposed new sanctions on Iran. Iranian oil is therefore not to be expected on the market in the short term, it said. The price of oil could not be slowed down by the Energy Information Administration’s lowered price forecast.
The dollar fell somewhat in late trading but defended its most recent gains on a daily basis. The dollar index was just up – the euro recovered from the daily lows. According to analysts at Bank of America, the leading indicators show that the US will achieve the market’s growth targets in the next two quarters, but the EU and Japan are currently showing significant downside risks. This speaks for the greenback.
The gold price climbed to its highest level in a week. But only when the marks of 1,790 or 1,800 dollars are exceeded would further upside potential, it said. The market is playing economic recovery and this could initially further increase the inflation effects and speak for the precious metal. The US bond market suffered from shifts into equities – yields rose as a result. Participants referred to the relaxation signals in the Omikron variant, which resulted in an increased risk appetite among investors. The yield on 2-year stocks reached its highest level since March 2020. The Fed could reduce its security purchase program again next week and faster than expected, it said.
Wanted for Intel with planned IPO
For the Intel share it went up 3.1 percent. The US semiconductor manufacturer wants to bring its subsidiary Mobileye to the stock exchange. Mobileye develops driver assistance systems and, according to estimates by those familiar with the matter, could be valued at more than $ 50 billion in an IPO. The EU Commission could take a closer look at the planned takeover of Nuance Communications by Microsoft, it said in a report. The deal, announced in April, valued at $ 19.6 billion in Nuance, has already been approved by US and Australian regulators.
Nuance lost just 0.7 percent – a sign that investors did not expect the deal to fail. Microsoft shares rose 2.7 percent. Coupa Software fell 2.9 percent. The company posted rising losses. Healthcare equity plummeted by more than 24 percent, the service provider in the health industry was in the red and was also expecting a deficit for the year as a whole. MongoDB’s titles were up 16.4 percent after the database management company reported third-quarter sales well above market expectations.