Frankfurt/New York, January 4 – Investors on Wall Street are cautiously optimistic ahead of the release of the minutes from the US central bank’s December meeting. The Dow Jones industrial average rose 0.7 percent to 33,363 early Wednesday afternoon in New York. The broader S&P 500 rose 1.1 percent to 3,867 points. The index for the Nasdaq technology exchange rose by one percent to 10,492 points.
Transcript of the last Fed interest rate meeting is expected at 8 p.m. Investors are hoping for an insight into the internal discussion about the further course of monetary policy in 2023. According to analysts, the main focus is on nuances. “We will learn that the Fed needs to maintain its firm stance and fight inflation. Then there will be back-and-forth between different members about where the final course should go,” said investment strategist Darrell Cronk of wealth manager Wells Fargo.
BONDS IN DEMAND – OIL PRICES PLYSK
US Treasuries were boosted by hopes that the Fed would stop its XXL interest rate hikes. The yield on the 10-year bond fell to 3.715 percent from 3.792 percent on Tuesday. Portfolio manager Dickie Hodges of investment bank Nomura sees the outlook for bond markets in the new year as “almost consistently positive”. In the short term, the upward trend will probably be interrupted for the time being. The major central banks will still have to deal with unacceptably high inflation. “But the need to keep raising interest rates will soon disappear. And when the Federal Reserve finally tells us that it has stopped raising interest rates, then the rally in the bond markets will be truly sustainable.”
Falling bond yields helped technology stocks such as Netflix, Apple and graphics card maker Nvidia gain between 2.3 and 4.2 percent. According to experts, rising inflation and higher interest rates will devalue future profits for high-growth technology companies.
At the same time, the price of oil fell. “Warning signs of a global recession, China’s weak recovery with rising Covid-19 cases, renewed strength in the US dollar and muted risk sentiment are all triggers that kept oil prices trapped overnight,” said Yeap Jun Rong, market analyst at IG. North Sea crude Brent and U.S. WTI extended their losses on Tuesday and were each just over four percent lower at $78.66 and $73.62 a barrel. barrel (159 litres).
CHINA STOCKS AND GENERAL ELECTRICITY DEMAND – MICROSOFT FALLS
Meanwhile, hopes of a long-term recovery from the recent coronavirus outbreak in China supported shares of US-listed Chinese companies. The prices of tech companies Alibaba, JD.com and Baidu rose by up to 15.1 percent. The China optimism also inspired the coffeehouse chain Starbucks. The coffee maker’s shares rose 3.5 percent to $104.40. Cowen analysts raised their price target to $112 from $104 earlier, expecting a recovery in the Chinese economy.
The spin-off of the medical technology company has paid off for the shareholders of the American conglomerate General Electric (GE). GE HealthCare shares rose more than five percent to $58.88 in their first day of trading. GE shares also rose 3.8 percent. At the same time, Microsoft lost 4.3 percent to 229.38 dollars. The analysts at UBS set the paper at “neutral” from “buy” and lowered the target price from $300 to $250. After the boom in working from home, slower growth is expected for Azure cloud technology and the Office suite of applications.
Wall Street up ahead of Fed minutes
Symbol photo: Image by Noel on Pixabay
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