2022/04/27 (034) Column

Dow fails to recover & Nasdaq recovery too,
while Russian stocks market extend rebound today.
Heating oil hits fresh record high on wednesday session
– USD Index broke above the 103 mark for the first time since Jan.`17.


Dow fails to recover

After Tuesday’s steep slide, US stock markets stabilized on Wednesday. The Dow Jones Industrial closed up 0.19 percent at 33,301.93 points after gaining more than one percent at times. The market-wide S&P 500 ultimately gained 0.21 percent to 4183.96 points. The technology-heavy Nasdaq 100 even turned negative late in the day and ended up losing 0.05 percent to 13,003.36 points.

The day before, the Dow had hit its lowest level in six weeks and the Nasdaq 100 even its lowest level in almost a year. The determining factors on the stock exchanges remain the Ukraine war, lockdown measures in China and the need for action due to inflation, which is putting pressure on the US Federal Reserve to tighten monetary policy.

The shares of the Google parent company Alphabet fell by almost four percent after disappointing figures. Experts mainly attributed slower growth overall to YouTube development. According to JPMorgan analyst Douglas Anmuth, the video platform is feeling the effects of competition from TikTok. The operating environment is no longer as favorable for Alphabet as it was last year.

In contrast, there was a price increase of 4.8 percent at Microsoft. The figures published the day before after the market closed were well received here. A strong cloud business helped the software giant generate significantly more revenue in the past quarter. Credit Suisse analyst Philip Winslow commented that the Azure cloud platform once again delivered strong figures.

The mixed results of the latest quarterly reports in the tech sector were supplemented by figures from Texas Instruments and T-Mobile US. The Deutsche Telekom subsidiary’s stocks rose 3.9 percent after raising this year’s target range for new phone contracts. The performance in the first quarter was also praised.

Nasdaq Recovery Fails

Wall Street gave up most of the gains in the final hour of trading after switching between gains and losses throughout the session as investors remained concerned over an aggressive Federal Reserve, Europe’s energy crisis, and China’s lockdowns to fight Covid and were monitoring earnings reports. The Nasdaq Composite closed flat after being up 1.7% at its highs while the Dow and the S&P 500 advanced 0.2%. Microsoft jumped as much as 6% as continued growth in its cloud business boosted its quarterly revenue to $49.4 billion. Meanwhile, Boeing shares fell as much as 9% after missing Wall Street’s and Alphabet’s slumped 3.5% after earnings also missed expectations amid a shortfall in YouTube advertising revenue.
Heating Oil Hits Fresh Record High

Heating oil futures skyrocketed above the $4.5-per-barrel level for the first time as lingering supply concerns supercharged existing upward momentum in the market. EIA data showed that distillate stockpiles, including diesel and heating oil, plunged by 1.4 million barrels to 107.3 million barrels last week, driving those inventories to their lowest level since `08. At the same time, daily oil output from OPEC nations and allies stood at 1.45 million barrels last month, with sanctions hitting Russian production. Heating oil prices, which move in tandem with the cost of crude oil, have dramatically increased after Russia invaded Ukraine.

Brent Crude Steadies Around $105

Brent crude futures steadied around $105 per barrel in volatile trading on Wednesday, after the EIA report showed a smaller than expected rise in US crude inventories, while investors balance supply and demand concerns over Russian oil and gas disruption and a worsening global economic outlook. Russia cut natural gas supply to Poland and Bulgaria amid a standoff over fuel payments, escalating an energy crisis at a time the EU is considering a ban on Russian crude imports. Last week, the European Commission said EU companies may be able to work around Russia’s demand without breaching sanctions. The market has been gripped by heightened volatility since Russia’s invasion of Ukraine in late February, with the US and UK imposing a ban on Russian oil imports, while the EU struggled for consensus on similar measures. Meanwhile, the Covid situation in China continued to weigh on the markets amid fears that Beijing may join Shanghai into lockdowns, clouding the demand outlook.

European Shares Snap Three-Day Slide The pan-European STOXX 600 snapped a three-day selloff to end Wednesday’s session higher, driven by commodity-backed stocks, as investors digested another slew of earnings releases while shrugging off macro headwinds. Mercedes-Benz AG said the first-quarter adjusted EBIT rose to €5.3 billion, beating analyst forecasts of €4.77 billion, on higher selling prices and sees healthy returns in 2022. Also, the Q1 net profits of Deutsche Bank surpassed market expectations. On the flip side, Credit Suisse reported a net loss for the first quarter of the year while announcing a management reshuffle. Aside from a busy day of earnings, market sentiment remained clouded by concerns over Gazprom’s supply cut to Poland and Bulgaria and a worsening outlook for growth and inflation in the eurozone. Domestically, the benchmark DAX 30 finished virtually flat.

Dollar Hits Five-Year High

The dollar index broke above the 103 mark for the first time since January 2017, buoyed by expectations of faster Federal Reserve policy tightening, while fears about the economic impact of China’s Covid-19 lockdowns and war in Ukraine boosted the dollar’s safe-haven appeal. Last week, Fed Chair Jerome Powell clarified that the central bank remains committed to taming inflation, currently at 40-year highs, while opening the door for a 50bps interest rate hike in May. Investors were also monitoring a worsening COVID-19 situation in China after authorities in Beijing expanded virus testing to most of the city, raising concerns about a lockdown of the capital. The most pronounced buying activity was against the euro, which tumbled to levels not seen since April 2017 against the greenback, given the worsening outlook for growth and inflation due to the war in Ukraine.