MARKETS USA / Wall Street with rest on shaky legs 06/12/20

By Florian Faust

NEW YORK (Dow Jones) – After the highest crash since March the previous day, Wall Street recovered slightly on Friday. However, the indices closed well below the daily highs. Because nothing had changed fundamentally. The economic outlook remained gloomy and the previous day’s crash had brought the market hope that had flown too high back into line with reality. The US central bank’s warnings of an only sluggish economic recovery were a wake-up call, it was said in the trade. The chief economist of the International Monetary Fund (IMF), Gita Gopinath, however, blew in the same horn as US Federal Reserve governor Jerome Powell previously. She also saw the recovery of the global economy slower than initially forecast.

But the optimists also spoke up again. They referred to central bank support. The huge flood of liquidity from central banks, but also from governments, will sooner or later at least partially find its way onto the stock exchange, it said. This view was supported by better-than-predicted US consumers. Consumer confidence calculated at the University of Michigan rose more than expected. The Dow Jones Index climbed 1.9 percent to 25,606 points and closed 360 points below the daily high – a drop of over 7 percent on a weekly basis. S&P-500 and Nasdaq Composite rose 1.3 and 1.0 percent, respectively. There were 2,278 (Thursday: 94) price winners on the NYSE 707 (2,930) losers. 38 (13) shares closed unchanged.

“It is normal for the market to try a recovery the next day, but I’m afraid it’s stillbirth, because sentiment is further clouded by IMF comments (…),” Avatrade chief market analyst Naeem Aslam warned. The arguments for and against shares remained largely unchanged. The economic damage caused by the corona pandemic and fears of a second wave of infection were countered by the hope of a rapid recovery in the economy and excessive liquidity.

oil and gold expensive

On the foreign exchange market, the ICE dollar index hardly moved over the day. The greenback was somewhat supported by the surprisingly positive consumer confidence. The euro fell to $ 1.1246 after a daily high of $ 1.1341. Meanwhile, expectations of the euro rose according to Bank of America. Fund managers have recently built more positions on a rising euro. They are optimistic about the planned reconstruction fund and the easing of peripheral spreads, which also benefited from the purchases of the European Central Bank. Since mid-May, the euro has made up around 5 cents against the dollar.

Oil prices stabilized like the stock market after oil also saw a dramatic drop in prices the previous day. The US light oil barrel of the WTI grade fell 0.2 percent to $ 36.26, while European reference oil of the Brent variety rose 0.5 percent to $ 38.73. The WTI price fell by over 8 percent compared to the previous week. Dealers referred to the renewed increase in new infections in several US states. Concerns about new standstill measures combined with the gloomy economic outlook would have prevented an oil price recovery, it said.

Despite increased risk taking, gold was sought. This defended the bulk of the most recent serves. The precious metal is also because of the expansive Monetary policy of central banks and serves as inflation protection. In line with this, US import prices rose noticeably in May, after they had clearly given way in April. Economists had forecast a less significant increase in May. Above all, the development of the oil price contributed to the increase. Nevertheless, the development of import prices is an indication of US inflation. The troy ounce gained a further 0.3 percent to $ 1,732 in late business – around 3 percent on a weekly basis.

By contrast, bonds were overshadowed by the stock market, especially as investors made profits after a two-day rally. The ten-year yield also rose by 3 basis points to 0.70 percent, supported by positive consumer sentiment with falling prices. Previously, yields had been plummeting for four days.

Boeing recovery supports Dow

Last but not least, the premiums in the Dow were accounted for by Boeing, the aircraft manufacturer’s titles recovered by 11.5 percent after the stock had bottomed in the Dow on the previous day. In the tourism and travel sector, Norwegian Cruise Line, Carnival and American Airlines recovered by up to 18.8 percent. All three papers are among the worst of the year.

Hertz soared by 35.4 percent. The insolvent car rental company wants to raise around $ 1 billion through a capital increase and thus benefit from the recent significant price increases. Adobe grew by 4.9 percent. The software and cloud company had earned more than expected in the second quarter because it benefited from the fact that many employees worked from home due to the corona pandemic.

Lululemon’s shares added 3.8 percent to the previous day’s losses after falling 4.7 percent until Thursday’s closing bell. The manufacturer of yoga clothing had recorded a surprisingly significant drop in sales in the first business quarter and does not expect a recovery until the fourth quarter at the earliest.

Goldman Sachs analysts are less pessimistic about auto sales this year. At the same time, the experts downgraded Tesla stock while upgrading General Motors stock to “Buy”. Tesla lost 3.9 percent, additionally burdened by a gradation by Morgan Stanley, GM increased by 5.5 percent. Johnson Controls shares rose 2.5 percent. The building technology specialist wants to buy back its own shares.

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INDEX last +/-% absolute +/-% YTD

DJIA 25,605.54 1.90 477.37 -10.28

S & P-500 3,041.31 1.31 39.21 -5.86

Nasdaq Comp. 9,588.81 1.01 96.08 6.87

Nasdaq-100 9,663.78 0.79 75.30 10.66

US bonds

Maturity Yield Bp to VT Yield VT +/- Bp YTD

2 years 0.19 -0.4 0.20 -100.9

5 years 0.33 0.7 0.33 -159.2

7 years 0.54 2.0 0.52 -170.9

10 years 0.70 3.1 0.67 -174.2

30 years 1.46 5.4 1.40 -161.2

CURRENCIES last +/-% Fri, 8.17 a.m. Thu, 5.45 p.m.% YTD

EUR / USD 1.1244 -0.36% 1.1308 1.1374 + 0.3%

EUR / JPY 120.83 + 0.17% 121.16 121.3270 -0.9%

EUR / CHF 1.0717 + 0.48% 1.0682 1.07 -1.3%

EUR / GBP 0.8988 + 0.24% 0.8986 0.9000 + 6.2%

USD / JPY 107.38 + 0.53% 107.16 106.6755 -1.3%

GBP / USD 1.2521 -0.60% 1.2584 1.26 -5.5%

USD / CNH (offshore) 7.0770 -0.02% 7.0787 7.0699 + 1.6%

Bitcoin

BTC / USD 9,408.51 + 0.71% 9,364.01 9522.5050 + 30.5%

ROHÖL last VT-Settl. +/-% +/- USD% YTD

WTI / Nymex 36.42 36.34 + 0.2% 0.08 -38.1%

Brent / ICE 38.89 38.55 + 0.9% 0.34 -38.2%

METALLE last day before +/-% +/- USD% YTD

Gold (spot) 1,731.91 1,727.50 + 0.3% +4.41 + 14.1%

Silver (spot) 17.51 ​​17.60 -0.5% -0.09 -1.9%

Platinum (spot) 811.65 815.25 -0.4% -3.60 -15.9%

Copper future 2.62 2.59 + 1.1% +0.03 -7.1%

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Contact the author: [email protected]

DJG / DJN / flf

(END) Dow Jones Newswires

June 12, 2020 16:15 ET (20:15 GMT)

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