Oil prices collapse
Wall Street got off to a turbulent start to the week
07/05/2022, 10:30 p.m
It’s not just concerns regarding interest rate hikes that continue to weigh on Wall Street. Investors are also concerned regarding the fear of an energy crisis in Europe. The euro falls to its lowest level in almost 20 years. Oil prices are clearly under pressure.
Amidst the tension between fears of a recession and sharply falling oil prices, things have been turbulent on the US stock exchanges. A very weak start was followed by a strong recovery, led by technology and growth stocks, which are considered to be particularly sensitive to interest rates. The triggers for the recovery were market interest rates that continued to fall significantly, the very strong dollar and the collapsing oil prices, which dampened fears of inflation and thus expectations of interest rate increases.
However, concerns continued that the US Federal Reserve’s rate hikes to curb inflation might result in a recession. Added to this was the fear of an energy crisis in Europe, also with potentially fatal consequences for the economy. That US President Joe Biden should consider rolling back some of the trade tariffs imposed on China by his predecessor Donald Trump was largely overlooked.
Of the Dow-Jones-Index lost 0.4 percent to 30,968 points. At the low it was over 600 points lower. For the S&P-500 was up 0.2 percent, the tech-heavy Nasdaq indices even turned significantly into positive territory and increased by up to 1.7 percent. According to initial information, there were 1,394 (Friday: 2,412) price winners and 1,861 (828) losers on the Nyse. 122 (87) titles closed unchanged.
The US 10-year yield fell another 7 basis points to 2.82 percent, just below the 2-year yield in what is considered a recession signal. In mid-June it was already at almost 3.50 percent. Bonds were sought following as a supposedly safer haven and also with speculation that the US Federal Reserve might step on the brakes on interest rate hikes given the increasing signs of an economic slowdown. Meanwhile, US orders in May were significantly better than expected.
Gold at annual low
Of the Dollar rose once morest the euro to its highest level in 20 years. While this tends to be unfavorable for exporters, it is helping to depress US inflation. Of the Euro fell 1.6 percent to $1.0260.
On the one hand, the energy crisis in Europe weighed on the euro and, on the other hand, the fact that the ECB only announced its first and only small rate hike for July, while the US central bank has long been turning interest rates and is continuing to do so. However, the dollar also showed strong strength once morest other currencies (dollar index +1.3 percent) because it was also sought following in its function as a safe haven in an environment characterized by a great deal of uncertainty.
Die oil prices collapsed with concerns regarding the economy and the strong dollar. They fell by around 10 percent at the top and marked the lowest levels since mid-May. Another reason market participants cited was that US oil production is likely to increase following the Supreme Court just stripped the Environmental Protection Agency somewhat of its say in new production sites.
Of the gold price fell sharply by 2.3 percent and reached a low for the year over the course of the year. It was weighed down by the strong dollar and the prospect of rising interest rates. Analyst Chintan Karnani from Insignia Consultants spoke of a technical slump – also for silver and copper – aggravated by fears of recession and the faster rate hikes by various central banks.
Curevac lawsuit once morest Biontech in focus
On the stock market, papers from the energy sector were at the end with a minus of 4.0 percent, followed by utility stocks (-3.4 percent).
The course of Curevac (-1.1 percent) was not impressed by the news that the vaccine manufacturer had lost its intellectual property rights in mRNA technology to a competitor Biontech (+2.2 percent) sees injured and therefore wants compensation by lawsuit. Modern gained 3.7 percent. The US vaccine manufacturer also relies on mRNA technology.
Exxon Mobil lost 3.1 percent, although second-quarter profit is likely to be up to $18 billion, according to a statement to the US Securities and Exchange Commission. It would be the highest in almost 25 years.
For Tesla was up 2.6 percent. At the weekend it became known that vehicle deliveries had fallen for the first time in more than two years compared to the previous quarter, but had increased significantly compared to the previous year.
