Wall Street up again
Gloomy forecasts make investors smile
08/30/2023, 11:08 p.m
As on the previous day, there are increasing signs of a slowdown in the economy – and the stock market traders are happy about it: Because this makes another interest rate hike less likely, the US market is growing. China continues to cause concern.
Hopes of an interest rate pause by the US Federal Reserve, boosted by weak economic data, kept Wall Street afloat on Wednesday. The Dow Jones Index the standard values closed 0.1 percent higher at 34,890 points. The tech-heavy one Nasdaq advanced 0.5 percent to 14,019 points. The broad one S&P 500 increased 0.4 percent to 4514 points.
The US private sector added 177,000 jobs in August, fewer than forecast. Investors are eagerly awaiting Friday’s official jobs report from the US government. US gross domestic product (GDP) also rose less than expected in the second quarter, at an annualized 2.1 percent.
The weaker data supported the courses on the stock exchanges, said portfolio manager Thomas Martin from the asset manager Global Investments. “The market is on the assumption that the Fed will almost certainly not hike rates in September and they still have a few options up their sleeves for year-end.” For September, the majority of market participants expect the Fed to pause interest rates while they are still divided on whether there could be another hike or a hike in November.
Banger look at China
The other source of uncertainty, apart from interest rate developments, is China. Overall, the Chinese economy is not gaining as much momentum as the leadership in Beijing had imagined after the strict corona measures were lifted at the end of last year. The entire Chinese real estate industry is in trouble as real estate prices fall due to the weakening economy and fresh loans become more expensive at the same time. Foreign creditors of Country Garden are apparently preparing for a possible debt restructuring of the struggling real estate group. Criticism from the West about the investment climate in China is also depressing the mood.
Chinese companies listed in the USA recorded some larger discounts. JD.com fell by 1.5 percent, the e-car builders Li car, noo and Xpeng lost up to 2.2 percent.
Oil prices rose only moderately by a good half a percent, although according to an industry association the previous evening the state Energy Information Administration had announced a very sharp drop in oil stocks for the past week. It was also much higher than expected. Some traders no longer wanted to trade on the supply data after they had recently been extremely declining several times, it was heard. Elsewhere, the low price reaction was explained by the fact that it was already the fifth increase in oil prices in a row.
Whiskey doesn’t work, cannabis does
In the US technology sector, a forecast cut of spoiled HB investors’ mood. The computer manufacturer’s papers slipped by almost seven percent. HP now expects adjusted earnings per share to be between $3.23 and $3.35 in 2023, up from $3.30 to $3.50 previously. The reason is the persistently weak demand for new IT equipment and the faltering business in China.
The maker of Jack Daniels, Brown Forman, also disappointed with its quarterly figures. The higher cost of living for consumers is affecting demand for whiskey and gin, the statement said. Shares fell about 4 percent.
The shares of cannabis companies, on the other hand, went into the depot. According to a Bloomberg report, the US Department of Health and Human Services (HHS) is calling for marijuana to be moved to a lower-risk drug category. Shares listed in the US Cronos Group increased by 7.4 percent, Canopy Growth by more than 13 percent and Tilray Brands by almost eleven percent.