Although Fed chairman Powell could not yet be caught making surprising statements during his speech at the Jackson Hole symposium, he sounded more hawkish and dovish. Not exactly something that makes investors happy after an unprecedentedly rapid series of interest rate hikes. During his speech, the financial markets lost ground.
Federal Reserve Chair Jerome Powell believes that “restrictive monetary policy is called for” in order to achieve a 2% inflation rate pic.twitter.com/U7BxfwcD1d
— Bloomberg Markets (@markets) August 25, 2023
Less than three years ago, an American consumer could take out a thirty-year mortgage at an interest rate of less than 3%. Fast forward to today: that same mortgage now has an interest burden of more than 7%. And that saves a sip on a drink.
3 years ago: 30-yr mortgage rate was 2.91% & median existing home price in the US was $306k.
Today: 30-yr mortgage rate is 7.23% & median home price is $407k.
Result: $20k increase in down payment (20% down) and 117% increase in monthly payment (from $1,020 to $2,216).
— Charlie Bilello (@charliebilello) August 25, 2023
Higher interest rates not only hurt share prices, the housing market is also particularly sensitive to interest rates. In the US, many potential home sellers are already seeing the storm and are not offering the home for sale for the time being.
Active listings of homes for sale in the US fell 19.5% over the last year to the lowest level on record (Redfin data going back to 2012). pic.twitter.com/ahLEJX6lTI
— Charlie Bilello (@charliebilello) August 25, 2023
Damrak
Just like the other financial markets, the Damrak gradually lost ground during the day. Fed Chairman Jerome Powell was determined to be strict and did not rule out further interest rate hikes “if necessary”. Bad news for the bulls and especially for investors with a lot of growth stocks in their portfolio.
The chippers didn’t manage to pull the cart today on the Damrak, but a lot defensials such as Unilever, RELX, Heineken and Ahold managed to keep the AEX at a reasonable level.
Within the AMX, Alfen was able to partly recover from the price shocks earlier this week and biotech fund Galapagos also made a nice profit. There was a loss for growth funds such as Basic Fit and Just Eat Takeaway, while Van Lanschot was again on offer.
The small caps mostly took it easy at the end of the week, with still nice gains for the rating Sif, while Avantium and CM.com also gave a sign of life again.
The AEX ended the day almost immediately at a final position of 733.37 points.
Top three risers/fallers
ASML
ASML’s share price has dropped by about €100 since mid-July. That while the Veldhoven group has full order books and there is nothing wrong with the prospects. All the reasons for the investment case of the fund for the IEX Investor Desk to take a closer look:
ASML: a good entry point? IEX Premium via @IEXnl
— IEX Investors Desk (@Beleggersdesk) August 25, 2023
Mithra
Mithra Pharmaceuticals, which is listed on Brussels Euronext, is a classic biotech fund: wild price movements, high risks, a considerable cash burn and yet a view of possibly better times. The question is whether it is responsible for investors to participate in this Belgian roller coaster:
Again Mithra grabs the emission weapon IEX Premium via @IEXnl
— IEX Investors Desk (@Beleggersdesk) August 25, 2023
Jackson Hole
The Jackson Hole Symposium is back in full swing. What kind of meeting is this, who is speaking and why is this event important for investors? Everything revolves around the “R*” this weekend and that is of significance that should not be underestimated. More about this at IEX Premium:
Fed Chairman Powell also doesn’t know IEX Premium via @IEXnl
— IEX Investors Desk (@Beleggersdesk) August 25, 2023
IEX Beleggerspodcast
A nice week end: the IEX Beleggerspodcast. And there will be a lot of that this week usual suspects past like Nvidia, Alfen and a row of stocks with a link to corona.
IEX BeleggersPodcast: Nvidia chippers cycle and baked pears IEXnl via @IEXnl
— IEX Investors Desk (@Beleggersdesk) August 25, 2023
Wall Street
Investors in the US are also looking mainly at possible hints from Fed Chairman Powell about further interest rate policy. So far it remains with the open door of “further interest rate hikes if necessary.”
Marvell Technology (- 8%) had better-than-expected figures, but was written off on a disappointing outlook according to investors. Also Nvidia (- 4%) had to go back despite particularly good figures, while department store chain Nordstrom ( – 11%) gloomy about an austerity consumer.
Investors fluctuated a bit between hope and fear, prices on Wall Street fluctuated between small profits and ditto losses. At the close of Europe, the Dow Jones was up 0.1%, the S&P 500 lost 0.1% while the Nasdaq fell 0.3%.
Annuities
Initially a fairly calm day on the international bond market, but the devil was in the tail. Powell’s speech at the Jackson Hole meeting caused interest rates to rise.
Ten-year yield Netherlands 2.91% (plus 5 basis points) Ten-year yield Germany 2.57% (plus 5 basis points) Ten-year yield France 3.10% (plus 5 basis points) Ten-year yield Italy 4.25% (plus 6 basis points) Ten-year yield US 4.27% (plus 3 basis points) UK 10-year rate 4.52% (plus 9 basis points)
Broad market
There was not much going on on the broad market today. Most European stock markets showed an economical plus. A typical Friday mood, or fear of statements by a speeching Jerome Powell?
Gold is struggling to hold the $1,900 level, while bitcoin is fearfully trading close to $26k. The VIX does virtually nothing: if you wanted more action, you could go to the oil market.
The Damrak
ABN AMRO (0%) will receive a compensation claim of €200 million
Adyen (+ 0.2%) loses a big fan with the Swiss UBS: the investment bank halved the price target of this former stock market favorite this week
IMCD (-0.5%) also suffered a price target cut, but that did not impress investors too much
Alfen (+ 3.2%) recovered somewhat after a significant price loss earlier this week on the basis of mediocre half-year figures
Basic Fit (-2.3%) is in the corner of growth stocks and then bad news on the interest rate front spoils the game
VanLanschot (- 2.2%) yesterday released slightly disappointing half-year figures and that seems to have an effect on the price for another day
Farming (- 1.4%) has shown an erratic price development this week with an increase above € 1.22 to close the week on a down note, without any real directional news
Sif (+ 0.4%) did not surprise with its half-year results today, but it certainly did not disappoint
Advice (source: Guruwatch.nl)
The agenda is August 28
09:00 London stock exchange closed
10:00 Money supply and loans – July (eur)
And then this
Germans continue to gloom
More negative news out of Germany. German Ifo Business Climate Index declined to 85.7 in August, lowest since Oct2022 vs. 86.7 expected as both components disappointed. Ifo Current Assessment Index dropped to 89 vs 90 expected. Ifo Expectations Index dropped to 82.6 vs 83.6… pic.twitter.com/WKILMdvleD
— Holger Zschaepitz (@Schuldensuehner) August 25, 2023
Final Cybertruck price not yet known
Tesla hasn’t issued final pricing or specs for Cybertruck as Musk memo warns of manufacturing challenges
— CNBC (@CNBC) August 25, 2023
Apple least loved tech stock among professional investors
Apple is most ‘under-owned’ big tech stock among large investors. That could be a good thing.
— MarketWatch (@MarketWatch) August 25, 2023
Martin Crum is a senior investment analyst at IEX.nl. The information in this column is not intended as professional investment advice or as a recommendation to make certain investments. Crum can take positions in the financial markets.
2023-08-25 15:48:35
#Powell #sounds #hawkish #dovish #IEX.nl
