By Steffen Gosenheimer
NEW YORK (Dow Jones) — Again led by technology stocks, US stock markets continued to slide on Wednesday. Market interest rates, which continued to rise, had a negative effect, which hit the technology and growth stocks, which are considered particularly sensitive to interest rates, in particular. Higher interest rates undermine their often high valuations. The minutes of the US central bank meeting in mid-March, which were eagerly awaited, caused some volatility, but did little overall to change the previously seen trends in equities, the dollar and interest rates.
The record contained little that was surprising. In addition to the signal that interest rate hikes of 50 instead of 25 basis points might soon be forthcoming, it showed in particular that no final decision had yet been made on the reduction of the bloated central bank balance sheet and that this might not happen until May at the earliest. Fed Chair Powell had previously said the Fed might start doing this as early as May and the balance sheet shrinking might “equate to an additional rate hike.”
The Dow Jones index lost 0.4 percent to 34,497 points, closing more than 200 points above the daily low. It was supported by gains in more defensive and relatively heavy stocks such as United Health, Johnson & Johnson, Walmart and Amgen. The S&P 500, on the other hand, fell by 1.0 percent and the tech-heavy Nasdaq indices by up to 2.2 percent. According to preliminary information, there were 1,008 (Tuesday: 655) price winners, 2,356 (2,707) losers and 102 (118) unchanged titles on the Nyse.
Bond yields continued to rise, hitting three-year highs. The day before, two central bank officials, who are considered to be more dovish, had made clear hawkish statements. On the day of the report, Philadelphia Fed President Patrick Harker said that he thought a series of interest rate hikes were necessary. The ten-year period is up 6 basis points to 2.61 percent, while the two-year period is down 3 basis points to 2.49 percent. As a result, the yield curve moved further away across this area from the recent inversion that is seen as a harbinger of a recession.
“Everyone is pretty clear that the Fed is going to embark on a rapid tightening cycle,” Lombard Odier economist Samy Chaar said ahead of the minutes. While it’s possible they might pull off a soft landing, it would be quite a one Miracles,” he continued, noting that central bankers need to get inflation under control without plunging the economy into recession.
In addition, the escalation in the Ukraine war with the obviously Russian atrocities depressed the mood, especially since further sanctions once morest Russia were already being introduced for this reason. Among other things, the US wants to ban “any new investment” in Russia, and the EU wants to stop coal imports.
Takeover poker in the aviation sector
Real estate stocks, among others, suffered from the rising interest rates on the stock market. Pultegroup lost 2.7 percent, Lennar 4.3 percent or DR Horton 4.0 percent.
Rivian Automotive loses 5 percent. The electric car manufacturer has achieved the goals it has set itself for production and deliveries, but in the trade it is said that the market expectations for deliveries for 2022 are in some cases significantly higher than the Rivian forecast.
Jetblue Airways lost another 8.7 percent. Raymond James downgraded the stock. The airline has submitted a bid for low-cost airline Spirit Airlines, challenging competitor Frontier Airlines. The day before, Spirit had gained over 20 percent with these rumors. Now they lost 2.4 percent.
Tilray Brands gained 2.9 percent. The pharmaceutical company, which specializes in cannabis, was back in the black in the past quarter, beating consensus expectations.
Advent Technologies reacted to the news of a technology, sales and development partnership with Hyundai with a share price explosion of more than 75 percent.
Oil prices at three-week low
Oil prices fell significantly, most recently by almost 5 percent to three-week lows. After a surprising increase in US oil stocks by a US industry association, official US oil stocks also rose last week. In addition, daily oil production in the US has risen to its highest level since the outbreak of the pandemic.
Oil prices were also weighed down when the International Energy Agency tweeted that developed countries would release 120 million barrels of emergency reserves, including the 60 million barrels announced by the US. Added to this was the general fear of stagflation as a stress factor.
The dollar maintained the strong gains of the previous day, the dollar index was just slightly up recently.
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INDEX last +/-% absolute +/-% YTD
DJIA 34.496,51 -0.4% -144,67 -5,1%
S&P-500 4.481,15 -1,0% -43,97 -6,0%
Nasdaq-Comp. 13.888,82 -2,2% -315,35 -11,2%
Nasdaq-100 14.498,89 -2,2% -321,75 -11,2%
US Bonds
Term Yield Bp to VT Yield VT +/-Bp YTD
2 years 2.49 -4.0 2.53 175.6
5 years 2.70 -0.5 2.70 143.7
7 years 2.69 +2.0 2.67 124.6
10 years 2.60 +4.8 2.55 109.1
30 years 2.62 +4.2 2.57 71.7
FOREX last +/- % Wed 7:56am Tue 5:30pm % YTD
EUR/USD 1,0897 -0,1% 1,0893 1,0927 -4,2%
EUR/JPY 134,87 +0,0% 135,03 134,81 +3,0%
EUR/CHF 1,0167 +0,3% 1,0145 1,0146 -2,0%
EUR/GBP 0,8336 -0,1% 0,8337 0,8331 -0,8%
USD/JPY 123,77 +0,1% 123,95 123,38 +7,5%
GBP/USD 1,3072 -0,0% 1,3066 1,3114 -3,4%
USD/CNH (Offshore) 6,3592 -0,3% 6,3745 6,3751 +0,1%
Bitcoin
BTC/USD 43,898.95 -4.5% 45,382.34 45,765.59 -5.1%
ROHOEL zuletzt VT-Settl. +/- % +/- USD % YTD
WTI/Nymex 97,05 101,96 -4,8% -4,91 +31,3%
Brent/ICE 102,09 106,64 -4,3% -4,55 +33,3%
METALS last day before +/- % +/- USD % YTD
Gold (Spot) 1.926,33 1.923,69 +0,1% +2,64 +5,3%
Silver (Spot) 24.46 24.34 +0.5% +0.12 +4.9%
Platinum (Spot) 959.15 971.75 -1.3% -12.60 -1.2%
Kupfer-Future 4,73 4,80 -1,4% -0,07 +6,2%
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DJG / DJN / gos
(END) Dow Jones Newswires
April 06, 2022 16:10 ET (20:10 GMT)
