Investors are primarily looking at the conflict in Ukraine.
(Photo: AP)
new York Tensions in Ukraine and new discussions about the US Federal Reserve’s future interest rate policy dominated Wall Street on Monday. The leading index Dow Jones closed 172 points or 0.5 percent in the red. The broader S&P lost 0.4 percent to close at 4,402 points. The Nasdaq technology exchange closed slightly weaker at 13,791 points.
All three major indices ended weaker for the third time in a row. Prices also fell on the stock markets in Europe. According to media reports, military action in the Ukraine conflict could take place as early as Wednesday. US Secretary of State Anthony Blinken announced the closure of the embassy in the Ukrainian capital of Kiev. It should be relocated to Lviv in the west of the country. Blinken referred to a “dramatic acceleration in the build-up of the Russian armed forces”. According to the Wall Street Journal, the US State Department orders the destruction of computer equipment.
A possible invasion of Ukraine would be a major risk for stock markets, Morgan Stanley’s equity strategist Michael Wilson warned in an analysis. For example, higher energy prices “would, in our view, destroy demand and plunge several economies straight into recession,” said Wilson, who is known for his pessimistic views.
The tense situation means that investors are also very sensitive to every headline. Oil prices rose. The price of the WTI strain climbed to its highest level since September 2014, trading at $93.89.
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New discussions about the Fed
Concerns about war are also bringing monetary policy back into the focus of investors. Should the economy cool, that would also push the US Federal Reserve to take a less hawkish stance, according to Morgan Stanley’s Wilson. Fed Chairman Jerome Powell recently announced a much tighter monetary policy, with the first interest rate hike in March. Then the reduction of the balance sheet total should begin.
Stocks would continue to be in correction mode, the Morgan Stanley strategist clarified. The broad S&P 500 is already down 8 percent this year. The technology exchange Nasdaq closed 15 percent below its recent all-time high on Monday.
Goldman Sachs is now expecting seven rate hikes this year instead of five. The bank also downgraded its outlook for the stock market year, expecting the S&P to gain just 2.8 percent this year.
UBS was more optimistic on Monday: “Despite the recent volatility, it’s important to remember that we’re still in an environment where the economy and corporate earnings are growing robustly,” said Mark Häferle, chief investment officer at UBS. He expects both geopolitical tensions to ease and inflationary pressures to ease. “That will cause the markets to rise again.”
>>> Read here: Why the US is reluctant to take the most effective measure in its struggle with Putin.
James Bullard, head of the regional central bank in St. Louis, didn’t want to have anything to do with it. He spoke out in favor of fighting inflation more vigorously than previously planned. The central bankers were surprised by the sharp rise in prices, he admitted on the US stock exchange broadcaster CNBC. Consumer prices rose 7.5 percent in January compared to the previous year. “That’s a lot of inflation,” Bullard said. He was therefore in favor of scaling back monetary policy support more quickly.
“Our credibility is at stake and we need to act on the data,” Bullard said. However, he assumes that this could happen without causing distortions in the markets.
Look at the individual values
Rivian: Star investor George Soros bought almost 20 million shares in the electric truck manufacturer in the fourth quarter of 2021. This emerges from the quarterly reports of his fund, which have now been published. The stake was worth about $2 billion at the time of purchase, but its value has since fallen to about $1.17 billion. Rivian papers increase by 6.46 percent in the course of trading.
Nvidia / AMD: Chip values were in demand on the stock market, which had collapsed by an average of 4.6 percent on Friday. Nvidia and AMD increased by around one percent.
Moderna: The vaccine manufacturer’s shares fell 11.7 percent to $142.50. The group announced on Friday evening that top management had sold shares in the vaccine manufacturer. Like some other companies in the industry, the papers have been on a downward slide for a long time. In mid-August they were still trading at just under $500.
Blackstone: Australian gaming giant Crown Resorts has agreed to a takeover bid by New York-based investment firm Blackstone. As Australian media reported on Monday, citing the listed casino group, the US company further increased its purchase offer in January and offered 8.9 billion Australian dollars (5.6 billion euros). This corresponds to around 13 Australian dollars (8.20 euros) per share. Blackstone has been trying to acquire the company for a year. Crown had rejected previous, lower offers. Blackstone shares fall 1.9 percent.
Splunk/Cisco: A media report about a $20 billion takeover bid by network equipment supplier Cisco gives Splunk a boost. The software manufacturer’s shares rose at times by more than eight percent. “Splunk would be a great addition to Cisco on several levels,” writes BTIG analyst Gray Powell. He estimates the synergies alone at more than 3.5 billion dollars. Cisco shares, on the other hand, are down 1.3 percent.
lockheed Martin/Aerojet Rocketdyne: According to the US defense company, it is withdrawing its 4.4 billion takeover bid for the rocket engine manufacturer Aerojet Rocketdyne. The move comes after the FTC unanimously voted last month to challenge the deal over antitrust concerns. The acquisition, announced in late 2020, would have given Lockheed a dominant position in solid-fuel rocket engines – a key part of the US missile industry. Lockheed shares are down more than 2 percent, Aerojet shares are also down — more than 5 percent.
With agency material.
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