Agreement on US debt ceiling gives investors a sigh of relief

Frankfurt The leading German index, the Dax, rose significantly on Friday. After a hesitant start, the stock market barometer had climbed a good one percent to 16,022 points by midday, once again exceeding the much-noticed 16,000-point mark. The Dax rose by 1.2 percent on Thursday.

Investors react with relief to the final agreement on raising the US debt ceiling. Late Thursday night, the second chamber of legislature, the Senate, also passed President Joe Biden-backed legislation that would remove the $31.4 trillion debt ceiling — averting a historic default. The Senate voted 63-36 in favor of the bill, which passed the House of Representatives on Wednesday.

This ends a long political nail-biter that had caused great concern on the markets about an economic crisis. US Treasury Secretary Janet Yellen recently warned that without an agreement, the US government would run out of cash by June 5th. The solution was therefore reached just before the deadline.

Senate Majority Leader Chuck Schumer said he was relieved. “We avoided a catastrophic default,” he said. The Democrats in particular would have carried the agreement across the finish line, because in both chambers of Congress more Democrats than Republicans would have voted for the deal.

The markets in Asia also reacted positively to the final agreement. The 225-stock Nikkei Index rose 1.2 percent. The Hang Seng index on the Hong Kong Stock Exchange even climbed around four percent, while the CSI 300 index of mainland China’s most important companies rose 1.4 percent.

Investors are eagerly awaiting the new US jobs report

Now investors and economists are focused on the next major event in the US. The labor market report for May will be published in the early afternoon German time. Experts polled by Reuters expect job growth of 190,000 to remain solid, although this would no longer come close to the number of 253,000 new jobs achieved in April.

The labor market is seen as an important factor for the future direction of monetary policy. Ulrich Stephan, chief investment strategist for corporate and retail clients at Deutsche Bank, says: “Today’s US employment report for the month of May could provide clues as to whether the US Federal Reserve will actually take a break on interest rates on June 14.”

As early as Thursday, the report by the private agency ADP indicated that the job market would remain strong. Should today’s data also turn out to be robust, the strategist believes that expectations of a further rate hike could be strengthened.

Investors are currently considering another interest rate hike in June, more likely in July. They also derive this from speeches by representatives of the US Federal Reserve. Important indications of this are the persistently high inflation and the continued solid labor market.

Analyst Esther Reichelt from Commerzbank refers to a statement by well-known economists Ben Bernanke and Olivier Blanchard, who analyzed the inflation dynamics in and after the pandemic in more detail. Accordingly, the Fed is unlikely to succeed in bringing inflation back to its target level without a more pronounced economic downturn. As a result, the Fed will probably want to see an easing in the labor market before considering a less tight monetary policy, says the analyst.

Oil market before the decision of the Opec-plus countries in the eyes of investors at the weekend

Also in focus are the oil prices, which turned negative again this week, but recovered towards the end of the week. The North Sea crude oil Brent rose by more than one percent to $ 75.50 for a 159-liter barrel on Friday morning after the price had risen a good two percent on Thursday. Similarly, the price for the US grade WTI increases to over $70 a barrel.

>> Read here: Why it at Opec meeting between Saudi Arabia and Russia could lead to tensions

“This is a very interesting development ahead of the Opec plus oil cartel meeting over the weekend and after Saudi Arabia’s energy minister warned investors not to bet on prices going higher,” said Craig Erlam, an analyst at US trading house Oanda. However, raw materials experts are rather skeptical as to whether the funding association will cut production again.

Look at individual values:

Adidas: Among the biggest winners in the Dax are Adidas papers with an increase of a good four percent. Sporting goods manufacturers are benefiting from the good mood in the industry after the positive figures from the yoga clothing manufacturer Lululemon. The company raised its full-year guidance for sales and earnings.

Puma: In the MDax, the shares of the competitor Puma also increased by 4.3 percent.

Real estate values: Real estate values ​​are on a recovery course at the end of the week. Vonovia have increased by more than five percent, making them leaders in the Dax. In the MDax, TAG Immobilien and LEG Immobilien each climbed 5.5 percent. Aroundtown achieved an increase of around three percent.

The sector has recently been particularly affected by the consequences of higher interest rates and the skyrocketing construction costs. The fact that ECB President Christine Lagarde stressed the importance of further interest rate hikes on Thursday put an additional damper on many stocks, according to a trader. Since the beginning of the year, Vonovia and LEG Immobilien have been down by more than 20 percent.

Per seven sat: The shares of the media company from the MDax rose by 2.3 percent after the Czech billionaire Renáta Kellnerová increased her stake in the TV producer. The PPF Group, which it controls, increased its stake, including financial instruments, to 15.04 percent.

Economy: The papers of the electronics retailer from the SDax rose by 3.7 percent during the day. The trading company wants to become more profitable by the middle of the decade, as it announced at its Capital Markets Day. The Düsseldorf-based company wants to make significantly more sales in online trading. In addition, the stores of MediaMarkt and Saturn are to be comprehensively modernized.

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