2022/04/28 (035) Column

Upward run again in us stocks
– quarterly figures give fresh impetus
Heating oil hits fresh all-time high today,
while the USD Dollar Index hits 19-year High!


Upward run again – quarterly figures give fresh impetus

The US stock markets went on a roller coaster ride again on Thursday and increased significantly in trading. This continued the swing exchange of recent times. Market traders attributed the volatility to the fact that investors were weighing predominantly positive company figures against unexpectedly weak US economic data. The Dow Jones Industrial, which was initially firmer, briefly turned negative, but recovered significantly and was last listed 1.82 percent higher at 33,908.27 points. The market-wide S&P 500 gained 2.44 percent to 4285.86 points. The tech-heavy Nasdaq 100, which fell to its lowest level in more than a year the day before, rose 3.36 percent to 13,440.57 points on Thursday.

Very positively received business figures of the Facebook parent company Meta and the resulting jump in the share price were seen in early trading as a driver for the initially significant gains among the technology stocks, which had recently slipped significantly. After the market close, the numbers of the tech industry giants Amazon, Apple and Intel are expected. “The earnings season has delivered more good news than bad news overall and could help divert investor focus from the macroeconomic headwinds that have weighed on major indices this month,” said National Securities market strategist Art Hogan.

Meanwhile, the US economy contracted surprisingly over the winter. Gross domestic product (GDP) fell by an annualized 1.4 percent in the first quarter. Economists, on the other hand, had expected growth of 1.0 percent. As expected, initial jobless claims fell slightly last week.

Because the number of Facebook users increased significantly again at the beginning of the year after a recent slump, the papers of the social media giant Meta soared by more than 18 percent. DZ Bank expert Ingo Wermann spoke of a “rally of relief” and then gave up his previous sell recommendation. According to Evercore ISI analyst Mark Mahaney, the rating of the paper has “now become downright ridiculous” for a leading global social media platform.

Wall Street Rebounds Strongly

US stocks extended gains in the final hour of trading on Thursday with the Dow up as much as 614 points, the S&P 500 raising 2.5%, and Nasdaq climbing 3.1%, as upbeat earnings lifted sentiment, despite an unexpected contraction in first-quarter GDP. Facebook-owner Meta Platform was more than 18% after the company posted upbeat earnings and user growth. Qualcomm gained 8% after beating market expectations for sales and earnings. Also, Amazon & Apple both rose more than 4% ahead of earnings after the bell. On the data front,the US economy shrank 1.4% during Q1, compared with analyst forecasts of a 1.1% expansion, as a record trade deficit, and softer inventory growth weighted.

Brent Crude Rises in Volatile Trading

Brent crude futures rose 1% to above $106 per barrel in volatile trading on Thursday, supported by growing expectations the EU would move toward banning Russian crude imports. Gains came after a report that Germany struck a deal with Poland to secure oil imports from global exporters via the Baltic Sea port of Gdansk, paving the way for a European Union ban on crude imports from Russia. In the last few days, crude oil prices had been fluctuating between gains and losses as investors continued to weigh between a bullish supply outlook and a bearish demand picture. While global oil supplies are tight, mass virus testing in Chinese cities due to increasing Covid infections and global economic growth slowdown raised fears about fuel consumption.

Heating Oil Hits Fresh All-time High

Heating oil futures skyrocketed above the $4.7-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 thoseinventories 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.

Dollar Index Hits 19-year High

The dollar index tested the 104 mark for the first time since December 2002, as investors have been betting that the Fed would deliver the first of many 50bps interest rate hikes next week to curb inflation. A tightening labour market reinforced such a view, with data from the Labor Department showing initial claims for state unemployment benefits remained at historically low levels. Last week, Fed Chair Jerome Powell clarified that the central bank remains committed to taming inflation 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. Meanwhile, the American economy unexpectedly contracted an annualized 1.4% in the first three months of 2022, primarily due to a record trade deficit and a decline in inventory investment.