(Boursier.com) — After a week of strong rebound and a three-day weekend for Memorial Day, Wall Street is fighting on Tuesday to extend its upturn. After a declining start to the session, the indices are stable or even slightly up in the evening, while interest rates are tending and inflation in Europe accelerated in May, now exceeding 8% over one year. . Oil continues to climb, to more than $123 for a barrel of Brent, after the agreement reached Monday evening within the EU for a gradual embargo on Russian oil. In Washington, Joe Biden receives Fed boss Jerome Powell on Tuesday to talk about the economy and inflation.
Two hours from the close of this last session in May, the Dow Jones is close to equilibrium (-0.08%) at 33,187 points, while the broad index S&P500 advance of 0.07% to 4,161pts, and that the Nasdaq Compositerich in technology and biotech stocks, gained 0.33% to 12,171 pts.
Last week, the three indices rebounded strongly, by 6.2% for the DJIA, 6.5% for the S&P 500 and 6.8% for the Nasdaq. The indices have thus put an end to a black series of 8 weeks of decline in a row for the Dow Jones, its longest downward series since… 1932! The S&P 500 and the Nasdaq had fallen for 7 weeks in a row. Despite its rebound, the Nasdaq still drops 24% from its November 2021 highs, at 16,057 pts.
With the Q1 corporate earnings season now almost over, investors remain focused on inflation and the Fed’s monetary response to soaring prices. They will monitor more particularly this week the monthly report on employment in May, due on Friday, as well as the PMI and ISM manufacturing activity indicators, Wednesday, then services, Friday. The Fed’s Beige Book on the economic situation in the United States will also be scrutinized on Wednesday evening to determine whether the central bank is likely to pause its rate hikes in the fall to assess their effects on inflation. .
Inflation accelerated in Europe in May, doubts about a peak reached in the United States
This Tuesday evening, US President Joe Biden will receive Federal Reserve Chairman Jerome Powell in the Oval Office to discuss the US and global economy with him, as the United States faces an unprecedented surge in inflation. for 40 years. Jerome Powell had indicated on May 17 to the ‘Wall Street Journal’, that the Fed will “need to see clear and convincing evidence” that inflation is easing before slowing down its rate hikes.
Monday, Fed Governor Christopher Waller spoke out in favor of half-point rate hikes for “several meetings” until inflation returns “substantially” closer to the Fed’s 2% target. His statements somewhat dampened hopes that the Fed would take a break in its bullish cycle in September. A hope that had supported the market rebound last week…
Inflation slowed slightly in April across the Atlantic, but it remains at a very high level. Over one year, prices jumped 8.3% in April, after +8.5% in Marchand month on month, prices rose 0.6% in April after jumping 1.2% in March, giving hope to the financial markets that a peak could now have been reached in the United States, what remains to be confirmed…
In the eurozone, prices instead continued to climb in May, according to preliminary figures released on Tuesday, which depressed European stock markets. The rise in prices thus climbed to a record of 8.1% over one year in the euro zone, after 7.4% in April against a background of uninterrupted rise in energy and food prices.
The economic indicators published on Tuesday in the United States came out quite solid. The S&P Case-Shiller House Price Index rose 3.1% in March (unadjusted 20-City indicator) month on month and 21.2% year on year. The FHFA (Federal Housing Finance Agency) index rose 1.5% in March year-on-year, and 19% year-on-year.
Waiting for US employment figures in May
The Chicago PMI manufacturing index came in above expectations in May at 60.3, against a consensus of 57 and after 56.4 in April. The indicator therefore signals an acceleration in the expansion of manufacturing industry in the region under consideration. The Dallas Fed Manufacturing Index on the other hand, came out negative at -7.3 points, against +4 consensus and +1.1 a month before, thus signaling a contraction.
Finally, the consumer confidence index, measured by the Conference Boardcame out at 106.4 in May, above consensus (103.7) but down from April (108.6).
The major statistic of the week in the United States will be the monthly employment report due on Friday. The consensus of economists expects 325,000 job creations, after 428,000 in April, and an unemployment rate of 3.5% against 3.6% in April. The markets will scrutinize the increase in hourly wages, expected to slow slightly, to 5.2% over one year against +5.5% in April and +5.6% in March. The jobs report will be preceded on Wednesday by ADP data on employment in the private sector, and Thursday by the weekly jobless claims figures in the United States.
Any sign of easing labor market tensions could reassure markets, and conversely, stronger than expected numbers would raise fears of overheating and stronger than expected Fed action.
Oil backed by EU embargo on Russian oil
Oil prices rose on Tuesday, supported by the European agreement on an embargo on Russian oil, the prospect of strong demand for crude in the United States for the summer season and the easing of health restrictions in China. The barrel of American light crude WTI (July futures) gained 2.04% to $117.42 on the Nymex, while the Brent of the North Sea July expiry takes 1.4% to $123.36. Crude prices are thus preparing to align a sixth consecutive monthly increase, for what would be their longest bullish streak in over a decade.
On the bond markets, rates started rising again on Tuesday. The performance of T-Bond at 10 years jumped in the evening by 10 basis points to 2.84%, and the 2-year T-Bond rate gained 6 bp to 2.54%. In the euro area, the return on 10-year German bund rebounded 7 bps to 1.12%.
In the foreign exchange market, the dollar index is firm (+0.06%) 101.73 points against a basket of reference currencies, while the euro fell 0.36% to $1.0739. The single European currency has regained almost 3% since May 12, supported by the change of more “hawkish” tone of the ECB and its boss Christine Lagarde, who now plans to raise key rates to positive ground by September (against -0.4% currently for the deposit rate).
After two difficult weeks, the bitcoin managed to cross the $30,000 mark. It points Tuesday evening to $ 32,120, up 2.7% over 24 hours. It remains far from its November 2021 record at nearly $69,000. gold fell 0.5% on Tuesday to $1,848.40 an ounce, for the Comex August futures contract.
In the news of companies listed on Wall Street, Salesforce, HP Inc. Where Victoria’s Secretannounce their latest accounts on Tuesday.
VALUES TO FOLLOW
Qualcomm (+1.7%) wants to take a stake in Arm’s IPO, says the Financial Times. Speaking to the FT, Qualcomm chief executive Cristiano Amon said the company was interested in an investment because Arm, a specialist in processor development and a subsidiary of SoftBank, is a very important asset and will be key to the development. Of the industry. Amon adds that Qualcomm could partner with other chipmakers to acquire Arm outright, if the consortium making the purchase was large enough, and even though it would take a lot of companies to participate for them to have the chance. net effect of maintaining the independence of Arm.
According to Amon, Arm won everywhere thanks to the collective investment of the whole ecosystem, from companies like Apple, Qualcomm and many others, and that’s because it was an architecture independent and open in which anyone could invest – before the acquisition by SoftBank. Amon notes that Qualcomm has not yet spoken to SoftBank about a potential Arm investment because SoftBank has prioritized resolving a standoff in Arm’s China unit.
Apple (+0.46%). Good news for the apple group? Taiwanese supplier Foxconn said the outlook for the second half of this year is moving in the right direction, with the announced lifting of the lockdown in Shanghai.
Boeing (+0.3%) and Norwegian Air Shuttle have reached an agreement in principle in which the Scandinavian company has agreed to buy 50 Boeing 737 MAX 8. The agreement also includes options for 30 additional aircraft. The 50 aircraft are expected to be delivered between 2025 and 2028, on a schedule closely matching the carrier’s current aircraft lease expirations. Therefore, the expansion of the company’s current fleet size will only be limited. The parties’ tentative agreement is subject to various closing conditions, which are expected to be finalized by the end of June 2022.
Paramount (+1%). ‘Top Gun: Maverick’, the sequel to the adventures of Pete Maverick Mitchell, played by Tom Cruise, more than 30 years later, has garnered 124 million dollars in domestic box office revenue in the American market, a particularly remarkable launch for the blockbuster Paramount. The mere prospect of the film had already boosted the titles of the main American cinema chains, AMC and Cinemark in particular, last week on Wall Street. The four-day revenue estimate in the US domestic market, covering Memorial Day, is $151 million according to Comscore. Internationally, the film grossed $124 million over three weekend days, bringing the total to $248 million worldwide.
The cinema operatorAMC Entertainment (+1%) is also on the rise with the success of Top Gun: Maverick’.