An eventful week lies behind us. Although the FED decision was in line with previous market expectations, Jerome Powell’s subsequent press conference put a damper on the stock markets.
Producer prices: sharpest decline since survey
Producer prices in Germany fell again. The data published in July already showed a decline compared to the same month last year. The August data recorded the largest decline since the index was surveyed, at -12.6%. However, the Federal Statistical Office pointed out that this enormous decline is due to a so-called base effect, because the other side of the coin is that in the wake of the Ukraine war, producer prices increased by more than 45% in August 2022 compared to 2021 recorded. However, it is positive to note that the current decline continued to be driven by the focus on energy prices.
Speaking of energy: Products such as electricity and gas, but also raw materials such as precious metals and oil, are primarily traded on futures exchanges, which are, however, less accessible to private investors. If you would like to find out more about how the futures markets work and how you can participate in developments there as a private investor, we recommend our latest webinar. Exactly these topics, among others, were discussed there; you can find a recording at the following link:
The FED’s interest rate decision took place on Wednesday evening. The ECB met last week and raised the local key interest rate to a total of 4.5%.
FED: No interest rate hike – press conference causes stock markets to fall
The FED’s actual interest rate decision was as market participants had expected in advance. The key interest rate range therefore remains at the level of 5.25 to 5.50 percent. However, the subsequent press conference, or more precisely the formulations of FED Chairman Jerome Powell, caused uncertainty. This did not confirm market participants’ hopes of lowering interest rates again this year. The future projection (the so-called dot plot) also suggested that the monetary authorities are currently not planning any drastic reductions in the key interest rate in the longer term. The US stock markets then slipped into the red. The German leading index DAX® also had a difficult time the following day.
Microsoft: Presentation on Thursday further heats up AI race
On Thursday evening, the eyes of tech enthusiasts turned not to Silicon Valley itself, but to New York. Microsoft held a special event there at which the company gave more detailed information about “Copilot”. The AI assistant was created through close cooperation with OpenAI and is intended to be integrated natively into the operating system in order to support the user in a variety of tasks. This service should be free (for now). However, the integration of the assistant into the popular Office applications is subject to a charge, at a hefty price of $30 per month, in addition to the subscription fees for the Office package itself. The company is thus following suit in the AI race as its competitor Google published their assistant last month. Microsoft hopes that “Copilot” will generate further income from the Office division.
That’s it for this week’s review. In addition to the interest rate decision, one of the big tech companies was once again in focus this week. Companies like Microsoft, Apple and Co. not only shape our everyday lives, but are also more than relevant on the stock market. We took a look at the large companies, the “stock Olympus”. What makes these companies special? Why are these so successful? And above all: will it stay that way? Are today’s big players also tomorrow’s big players? You can find the entire article in our current issue of Market Observation.
When purchasing certificates and leverage products, investors should familiarize themselves with how they work and be aware of the opportunities and risks. Investors should be particularly aware of the increased risks associated with leveraged products. In addition, it is important to pay attention to the creditworthiness and thus the default risk of the issuer. You can obtain further important and useful information about our products by calling the free number 0800 4000 910 or on our website www.hsbc-certificates.de.
Source: HSBC