NEW YORK (Dow Jones) — US stock markets start Wednesday trading firmer. Shortly after the starting bell, the Dow Jones index rose by 0.9 percent. The S&P 500 gains 1.0 percent and the Nasdaq Composite 1.2 percent. Dealers speak of a not very powerful countermovement to the recent slide.
The all-dominant topic is the US Federal Reserve interest rate decision, which will be announced at 20:00 CEST. Given persistently high inflation, market participants are now expecting the Fed to hike interest rates by 75 basis points instead of the 50 basis points last signaled. The central bank last made such a large interest rate move in 1994.
the financial markets had already anticipated a more aggressive tightening of monetary policy, notes analyst Susannah Streeter from broker Hargreaves Lansdown in view of the sharp price losses of the past few days. Expectations have risen that monetary policyholders will hit the brakes hard and hike interest rates by 75 basis points to prevent inflation from spiraling out of control, the analyst adds. At the same time, there are also fears that the Fed is stifling economic growth and causing a recession, which in turn would have serious consequences for global economic growth. Streeter expects a high level of nervousness to continue.
Before the Fed’s decision, however, investors still have to deal with other economic data: The Empire State Index recovered in June, but remained in negative territory against expectations at a level of 0.00. Import prices rose less than expected in May. Retail sales fell slightly last month while economists had expected a slight increase. The stock levels from April will be published later.
EU court decision supports Qualcomm
Corporate news is scarce on Wednesday. Qualcomm is trending 0.5 percent higher after the European Union’s Court of Justice annulled a multi-billion euro EU fine against the chip company. Zendesk shares are up 2.1 percent. The software company is in talks with activist investor Jana Partners after a sale fell through. Car rental company Hertz (+5.5%) has announced another $2 billion share buyback, just seven months after the previous one.
The dollar eases somewhat despite rate hike expectations. The dollar index is down 0.1 percent. Should there actually be an interest rate hike of 75 basis points, the US currency is likely to depreciate further, true to the motto “buy the rumor – sell the fact”, predicts ING. This reaction is likely to be temporary, however, as the dollar will benefit from higher interest rates over the longer term.
On the bond market, prices are picking up again after the recent sell-off. On the other hand, yields are falling, although they are still at multi-year highs. Gold is gaining more noticeably. The falling bond yields are making the precious metal, which is held interest-free, more attractive again. In addition, the weaker dollar makes gold cheaper for non-dollar buyers.
The weakening dollar is also alleviating selling pressures in the oil market. Prices there are falling after the API industry association unexpectedly reported an increase in US crude stocks the previous evening. Stakeholders are now eagerly awaiting official data from the state Energy Information Administration on Wednesday.
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INDEX last +/-% absolute +/-% YTD
DJIA 30,637.83 +0.9% 273.00 -15.7%
S&P 500 3,774.13 +1.0% 38.65 -20.8%
Nasdaq Comp. 10,957.12 +1.2% 128.78 -30.0%
Nasdaq-100 11,453.09 +1.3% 141.40 -29.8%
US Bonds
Term Yield Bp to VT Yield VT +/-Bp YTD
2 years 3.31 -11.2 3.42 257.6
5 years 3.47 -11.8 3.59 221.2
7 years 3.48 -10.6 3.58 203.6
10 years 3.38 -9.9 3.48 186.9
30 years 3.38 -4.9 3.43 147.8
FOREX last +/- % Wed 8:38am Tue 5:20pm % YTD
EUR/USD 1.0415 -0.0% 1.0444 1.0416 -8.4%
EUR/JPY 140.34 -0.6% 141.21 140.46 +7.2%
EUR/CHF 1.0429 -0.1% 1.0467 1.0424 +0.5%
EUR/GBP 0.8636 -0.5% 0.8719 0.8672 +2.8%
USD/JPY 134.75 -0.6% 134.98 134.86 +17.1%
GBP/USD 1.2061 +0.5% 1.2002 1.2010 -10.9%
USD/CNH (Offshore) 6.7255 -0.5% 6.7206 6.7562 +5.8%
Bitcoin
BTC/USD 21,374.58 -0.7% 21,102.09 22,397.34 -53.8%
ROHL last VT-Settl. +/- % +/- USD % YTD
WTI/Nymex 117.64 118.93 -1.1% -1.29 +61.6%
Brent/ICE 120.73 121.17 -0.4% -0.44 +60.0%
METALS last day before +/- % +/- USD % YTD
Gold (Spot) 1,826.25 1,808.40 +1.0% +17.85 -0.2%
Silver (Spot) 21.55 21.11 +2.1% +0.44 -7.6%
Platinum (Spot) 942.65 925.03 +1.9% +17.62 -2.9%
Copper Future 4.17 4.16 +0.2% +0.01 -6.2%
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(END) Dow Jones Newswires
June 15, 2022 09:42 ET (13:42 GMT)
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