2022/05/03 (038) Column

Bargain hunters fuel recovery?
S&P500 decreased to 49-week low,
before strong us stock market price recorvery!
However Oil prices edges up today, after sharp 5% fall


In the US stock market, bargain hunters have ultimately ensured a recovery after the price slide on Friday. In particular, the volatile technology stocks gained again on Monday. In a more as an highly nervous trading session, economic data on the mood in industry initially provided some relief, before the significant rise in yields on the bond market fueled investors’ fears of interest rates again and pushed the most important indices significantly into the red. Ten-year US bonds returned three percent in trading for the first time since December 2018. The leading index, the Dow Jones Industrial, closed 0.26 percent higher at 33,061.50 points after temporarily falling to the level at the end of February. The market-wide S&P 500 rose 0.57 percent to 4155.38 points. The tech-heavy Nasdaq 100 ended up up 1.72 percent to 13,075.85 points.

Meanwhile, the general mood among investors remains cautious ahead of the US Federal Reserve’s interest rate decision on Wednesday. When the Fed announces its monetary policy decisions, investors are currently expecting a 0.5 percentage point hike in the key interest rate. “But beyond that, investors are waiting for new insights into the additional steps to be taken to combat inflation,” said the experts at the private bank Metzler, looking beyond the concrete decisions. According to experts, the Fed is only at the beginning of a rate hike cycle. In an environment of rising interest rates, stocks become less attractive than fixed income securities.

Economically, the corona lockdowns in China and the ongoing war in Ukraine remain major international concerns for investors. This is one of the reasons why fresh economic data from the USA was particularly in focus on Monday. The mood in US industry has surprisingly deteriorated, as shown by the unexpected decline in the ISM Purchasing Managers’ Index for April. This barometer for US industry, which serves as a gauge for overall economic growth, is still well above the growth threshold of 50 points.

Analyst Ralf Runde from Landesbank Hessen-Thüringen drew a rather positive conclusion: “The important, national mood barometer for US industry is solid, although expectations were clearly missed.” Since the index is still clearly in the expansion zone, the interest rate expectations regarding the Fed will probably not be shaken this week. However, it is questionable whether the interest rate fantasies that go beyond this will be pushed through again. “A whole series of sharp rate hikes is already priced in,” the expert continued.

US stocks mounted a late-session turnaround Monday, with the technology-heavy Nasdaq 100 gaining 1.6% as Netflix and Meta Platforms jumped 4.8% and 5.3%, respectively, and Microsoft and Alphabet rose more than 2% each. The S&P 500 added 0.6% after touching a new low for the 2022 year at 4156 earlier in the day. Investors now look ahead to the Federal Reserve’s monetary policy decision on Wednesday, betting that the Fed will deliver the first of many 50bps interest rate hikes. The Dow and S&P 500 are coming off their worst month since March`20 on expectations of an aggressive tightening by the Fed, potentially causing a recession, and an ongoing war in Ukraine, further stoking inflation.

Brent Crude Edges Up After Sharp 5% Fall

Brent crude futures edged up 0.4% to settle at $107.58 a barrel on Monday after falling by over 5% to around $104 earlier in the day tracking gains in refined products markets and fears of supply disruptions from a looming EU ban on Russian oil. Diesel futures surged more than 5% as global fuel markets are extremely tight. Also, the EU is reportedly leaning toward a ban on Russian oil imports by year-end after discussions over the weekend but may spare Hungary and Slovakia from an embargo amid their dependence on Russian crude. Around half of Russia’s 4.7 million barrels per day of crude exports go to the EU, supplying about one-fourth of the EU’s oil imports in 2020. Meanwhile, data released over the weekend showed factory activity in China contracted for a second month to its lowest since February 2020 due to Covid lockdowns, which, in turn, also exacerbated concerns about weak demand.

Gold Hits Near 3-Month low

Gold extended its downward momentum into May, briefly testing the $1,850 region for the first time since early February, as investors have been recalibrating the higher possibility of an aggressive pace of Fed tightening. Fed policymakers look poised to deliver a series of interest rate hikes this year to tame inflation, likely starting on Wednesday with a 50bps, the sharpest rate hike since 2000, and bringing rates up to around 2.5% by the end of the year. Such an outlook fuelled bets on the dollar and brought longer-term yields to levels not seen since 2018, which, in turn, spooked investors away from the non-yielding metal.
Rice Hits Near 2-Year High

Rice futures were trading around $17.1 per hundredweight, a level not seen since June of 2020, amid rising demand from the animal feed industry. Rice has become a cheap alternative to wheat and corn, especially in China, the world’s largest feed market after Russia’s invasion of Ukraine stopped grain shipments from these 2 countries.

US Stock Markets Futures
After Midnight In New York On 05/03/2022

Because today’s DEVISE 2 DAY Affiliate Financial Market Online Newspaper Edition is published at an unusual time – namely on Tuesday morning (CET), the 3rd May 2022 – it may be usefully worth taking a quick look at US futures…