Monday, May 03, 2021
Economy on the road to success
Wall Street got off to a great start
Wall Street investors are still keen to buy. At the start of the new month on the stock exchange, the leading indices increased by around 0.5 percent. However, there are concerns among investors that the Fed will soon react to the prospering economy. Star investor Buffett also warns of inflation.
Wall Street was split in two today. Economic data provided an equally mixed picture. While activity in the US industry according to the ISM index had surprisingly slowed in April, although economists had expected an increase, the purchasing managers’ index compiled by IHS Markit in this sector showed a slight improvement. However, the market expectation was just missed here as well. However, both indices were clearly in the expansion area and did not stand in the way of an economic recovery.
The Dow Jones index gained 0.7 percent to 34,113 points, the S&P 500 rose 0.3 percent. The Nasdaq composite, however, turned 0.5 percent into the red. The market relied on economic recovery and left the technology sector a little to the left, the sector was one of the winners in the pandemic crisis. For 2,315 (Friday: 1,078) course winners on the Nyse, there were 1,078 (2,267) losers. 107 (115) titles went unchanged from the market. Investors were worried that the Fed would react to the prospering economy as soon as possible. Dallas Fed President Robert Kaplan recently spoke out in favor of a debate on scaling back bond purchases.
Star investor Warren Buffett also warned of inflation that was higher than forecast six months ago. The calls for monetary tightening would be more numerous and louder, it said. Federal Reserve President Jerome Powell and his colleague John Williams from New York were only able to dispel these concerns to a limited extent – even if both emphasized the need to maintain the ultra-loose monetary policy. Because both saw the economy on a brisk recovery course. The market will have to balance between positive and negative factors, said Luc Filip, head of private banking investments at SYZ Private Banking, who, however, saw the positive in the upper hand. However, he qualifies: “Economic dynamism will improve, but the big question is what is already being priced into the markets?”
Gold price increases significantly
In the meantime, the bond market prices rose slightly, and the yield on ten-year US Treasuries fell by 2 basis points in return with the Powell statements and the prospect of an unchanged loose monetary policy. Nordea analysts soon saw the March high of 1.74 percent reached – the experts even forecast an increase to 1.80 percent in the short term. Exploding new borrowing and rising growth prospects are likely to push yields up. The dollar gave up part of its premiums from the week-end following the Kaplan statements, the dollar index fell 0.1 percent.
Gold benefited from this as well as from the expectation of rising inflation and the negative news about the corona pandemic in many countries – especially in India. In trade, reference was also made to statements by the US Treasury Department that debt levels rose significantly. Oil prices tended to be firmer. The expectation of increasing global demand – despite the current corona crisis in Brazil and India – fueled prices. Bank of America stressed the fact that Chinese oil imports had already reached record levels.
Berkshire with profit jump
Warren Buffett’s investment company Berkshire Hathaway reported good business in the first quarter. The B share rose 1.6 percent. Tesla fell 3.5 percent. Automobilwoche reported that the start of series production in the “Gigafactory” near Berlin would be delayed by six months. The sales of the cosmetics company Estee Lauder in the most recent quarter had missed market expectations. The share lost 7.9 percent.
Dell fell 0.6 percent. The computer manufacturer plans to sell its Bloomi cloud business. Moderna rose 4 percent. The pharmaceutical company named new numbers of its corona vaccine deliveries. Clorox had promised to provide more transparency with the opaque profit development. The share was down 1 percent.