new York Concerns about growth have the US stock markets firmly under control again. The most important stock indices significantly increased their previous day’s losses on Thursday. The most recent decisions and statements by the European Central Bank (ECB) proved to be a drag. The high inflation is causing the central bankers in the euro zone to take countermeasures: the end of the net bond purchases that support the economy has been decided on July 1, and next month there will be a first interest rate hike for the first time in eleven years. Another rate hike could follow in September.
The leading index Dow Jones Industrial fell by 1.94 percent to 32,273 points. The market-wide S&P 500 fell 2.38 percent to 4018 points. The technology-heavy Nasdaq 100 lost 2.74 percent to 12,270 points.
According to the ECB, the economic consequences of the war in Ukraine are dampening economic development in the euro area and driving up inflation. Investors on Wall Street drew the conclusion that the US Federal Reserve may also have to step up its pace in order to curb inflation, which is also strong in the United States. Accordingly, nervousness increased before the consumer price data for May due at the end of the week.
The fact that the European Central Bank also sharply raised its inflation forecasts caught investors “on the wrong foot,” commented Thomas Altmann from asset manager QC Partners. “Very few expected such a significant upward adjustment.” This was already putting pressure on prices on Europe’s stock exchanges and, according to Altmann, caused a “sell-off” on the bond markets, where yields rose in return.
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In the case of US individual shares, the papers of the Chinese internet trading giant Alibaba fell by more than eight percent after the course fireworks the previous day. Here the hopes of an early IPO for the Alibaba holding Ant Group evaporated as quickly as they had come. This was preceded by reports that the Chinese financial regulators could give up their blocking stance. But it was followed by a denial from China’s stock exchange regulator. The day before, Alibaba shares had gained almost 15 percent on hopes that Beijing’s regulatory stranglehold could loosen.
Shares in other Chinese tech firms listed in New York also suffered from the prospect of ongoing regulatory pressure and slumped. Among the weakest stocks on the Nasdaq 100, JD.com fell 7.6 percent and Pinduoduo 9.6 percent.
Despite the ECB’s recent decisions, the euro came under pressure and ended trading on Wall Street at $1.0616. In contrast to Wall Street, some market participants on the foreign exchange market have probably speculated on an even faster pace of monetary tightening in the euro area. The European Central Bank (ECB) set the reference rate at 1.0743 (Wednesday: 1.0739) dollars. The dollar thus cost 0.9308 (0.9312) euros.
US government bonds suffered from the sustained rise in interest rates. The futures contract for ten-year Treasuries (T-Note Future) recently lost 0.19 percent to 117.86 points. The yield on ten-year government bonds rose to 3.05 percent.
Individual values in focus
Bank of America, Apple, Amazon: Interest rate dependent high growth companies were among the biggest losers on Wall Street. Bank of America shares fell 3.8 percent, Apple and Amazon shares fell by up to 4.1 percent.
Casino operator: US casino operators’ shares plummeted after China imposed new coronavirus restrictions on the industry. Wynn Resorts, Las Vegas Sands, MGM Resorts and Melco Resorts lost between three and 5.6 percent. Residents of Shanghai’s Minhang district have been ordered to stay at home for two days to curb the risk of transmission of the coronavirus.
Tesla: Tesla shares were in demand on the US stock market. At times they rose by 2.6 percent. The electric car maker sold more vehicles made in China again in May after production in April was severely affected by the corona lockdowns there.
NXP Semiconductors: At the top of the index, shares in NXP Semiconductors jumped about four percent. According to an Asian tech blog, the technology group Samsung is planning to take over the Dutch chip manufacturer. Samsung wants to benefit from the strong growth in the market for semiconductors for the automotive industry, it said.
AntGroup: Alibaba shares fell despite renewed hopes of an IPO for financial services firm Ant Group. The US-listed shares of the Chinese online retailer, whose founder Jack Ma Ant controls, fell more than eight percent. According to insiders, the fintech, which has fallen out of favor with Chinese regulators, has been given the green light to revive its stock market plans.
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