Dusseldorf US investors have gotten over their initial shock that the Fed could raise interest rates more aggressively. They returned to Wall Street on Tuesday, giving the Dow Jones and S&P 500 indices gains of around one percent each, to 34,824 and 4510 points, respectively. The tech-heavy Nasdaq advanced almost two percent.
On Monday, Fed Chair Jerome Powell surprised investors by saying that he would not rule out interest rate hikes of half a percentage point in the coming months. “The market isn’t worried about higher interest rates right now,” said stock trader Dennis Dick of brokerage firm Bright Trading. Instead, he welcomes a more restrictive stance from the US Federal Reserve to get inflation under control.
In terms of raw materials, the Russian invasion of Ukraine continued to play the decisive role. The US futures on wheat climbed up to 4.5 percent to $ 11.6925 a bushel. “The supply from the Black Sea region will remain longer than expected from the market,” said a broker. “Buyers have to pay more for wheat from other areas.”
The US crude oil grade WTI was hardly changed at 112.05 dollars per barrel (159 liters). “It’s pretty clear that if Russian oil imports were stopped, the German economy would grind to a halt,” said John Kilduff, partner at investment advisor Again Capital. Therefore, the EU shy away from a ban based on the US model.
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Nike: In terms of stocks, Nike was among the favorites after the sporting goods maker reported quarterly results that beat market expectations. The key to this was the improvement in replenishment, commented analyst Camilo Lyon from brokerage house BTIG. Due to the uncertain economic environment, however, he warned against buying Nike shares, as price setbacks are to be expected at any time. Nevertheless, the stocks headed for the largest daily gain in nine months with an increase of almost seven percent at times. In the slipstream, rival Under Armor gained 1.4 percent. Adidas and Puma advanced up to 3.2 percent.
Tesla: Tesla shares were also in demand, gaining almost four percent. The electric car manufacturer opened its factory near Berlin and handed over the first vehicles “made in Germany” to customers.
Alibaba: Alibaba’s US-listed stocks rose more than 12 percent. The Chinese online retailer wants to buy back its own shares in a record volume of 25 billion dollars. Since further acquisitions are difficult due to the strict regulation, this step is logical, said Rukim Kuang, founder of the research house Lens Company Research.
Financials: Among other things, investors access financial stocks, which beckon higher profits from the classic lending business when interest rates rise. Bank of America, Citigroup and JPMorgan rose up to three percent. Government bonds, on the other hand, flew out of the depots. That pushed the yield on 10-year T-Bonds to 2.377 percent. At the same time, the iShares exchange-traded fund (ETF) on US Treasuries fell 0.5 percent to a three-year low of $24.83.
SWITCH: Switch remains the focus of investors, according to a Bloomberg report. The data center operator is examining a possible sale of the company. Switch is up over the past five trading sessions, gaining 11 percent over that period.
More: Buy, sell or sit out? How investment professionals position themselves in times of crisis