The New York Stock Exchange ended another highly volatile week with a sharp technical rebound on Friday, though investors remain nervous about the prospect of tighter monetary policy from the U.S. Federal Reserve. , which is struggling to bring inflation back, which exceeded 8% in the United States, towards its medium-term goal of 2%. Oil is rising sharply again in anticipation of the implementation of Russia’s European oil embargo, and as Russia’s gas deliveries to Europe have been disrupted.
Two hours from the close, the Dow Jones recovered 0.64% to 31,925 points, while the broad S&P 500 index gained 1.54% to 3,990 pts, and the Nasdaq Composite, rich in technology and biotech stocks, rose sharply. 2.8% to 11,688 pts. The Nasdaq, however, is still down 27% from its November 2021 record, to 16,057 pts.
Earlier today, European markets ended in the green, where the Euro Stoxx 50 index climbed 2.5%, the DAX 30 gained 2.1% in Frankfurt, while in Paris the CAC 40 gained rally of more than 2.5%. In Asia, the Nikkei jumped 2.6% over Tokyo, and the Shanghai composite finished 0.96%.
Concerns persist about the economic slowdown, the prolonged period of rising inflation and the impact of tighter financial conditions remaining. The ongoing conflict in Ukraine and Covid’s lockouts in China also reinforce the feeling that supply chain disruptions will take time to weaken.
Towards raising the Fed rate by 50 basis points in June and July
Markets seemed somewhat reassured by the latest statements from Jerome Powell, the chairman of the Federal Reserve, who however showed himself less confident on Thursday than ever about the Fed’s ability to prevent a recession. by raising its rates to curb the rise in inflation. However, the Fed boss indicated that the Fed is not favoring the very strong increase, by 75 basis points, but instead by 50 basis points, in the next two meetings in June and July.
“If the economy is developing almost as expected, it would be appropriate to have an additional 50 basis point (half a point) increase in the next two meetings,” he added, noting that “if things are going to be better than in anticipation, we are willing to do less. If it is worse than expected, we are willing to do more “
“Our goal, of course, is to bring inflation down to 2% without the economy going into recession, or maintaining a relatively strong labor market,” the Fed head said. But things can be more complicated than initially expected: “Whether we can make a soft landing or not, that could really depend on factors beyond our control,” he admitted. …
Powell’s comments were cited by other Fed officials on Thursday. San Francisco Fed boss Mary Daly (not voting on the FOMC) supported a 50 basis point rate hike and said financial conditions needed to tighten further to rebalance supply and demand. James Bullard (voting) of St. Louis Fed told Yahoo Finance that the 50 basis point rate increase in at least two upcoming meetings is a good benchmark. He said he was sensitive to financial market disruptions, but also minimized the risk of a recession due to the strength of the labor market. He estimated that inflation was “more persistent” than expected.
American morale plummeted in April
The latest macroeconomic indicators, published on Friday, came out mixed. The import price index for April 2022 is stable compared to the previous month, against the +0.5% FactSet consensus. The export price index rose 0.6% compared to March, coming close to consensus expectations. Over a year, import prices jumped 12% and export prices rose 18%.
In addition, the morale of Americans has fallen back to an 11 -year low. The initial consumer sentiment index measured by the University of Michigan for the month of May 2022 thus came out at 59.1, far from the consensus of around 64, after a final reading of 65.2 in April.
In bond markets, interest rates rose again on Friday after several sessions of decline. The yield of the 10-year T-Bond recovered 6 basis points to 2.92% and the 2-year T-Bond rate rose to 2.61% (+4 bp) approaching its highest at more than 2 .7 % on Monday.
Cryptos Healed Their Wounds After the Terra Crash
Gold seems to have lost its appeal for sure, falling another 0.9% to fall close to $ 1,800 per ounce, to $ 1,808.10 on Friday night, for the June Comex futures contract. Cryptocurrency prices rose again on Friday after a terrible week marked by the crash of stablecoin UST and the cryptocurrency Luna, managed by the Terra blockchain, which lost almost all of their value in a few day, which strongly shook the confidence of investors. Bitcoin, which dropped below $ 27,000 on Thursday morning, traded at about $ 29,950, up 5% in 24 hours, although still far from its November 2021 high of more than $ 69,000.
Finally, oil prices rose again on Friday. A barrel of U.S. light crude WTI (June futures), which dropped below $ 100 on Tuesday, gained 3.6% to $ 110 on the Nymex, while North Sea Brent crude rose 3.4% to $ 111.08.
VALUES TO BE FOLLOWED
Twitter lost 9.3% to $ 40.86 on Wall Street, while the richest man on the planet, Elon Musk, who promised to take over the social media network for $ 54.2 per title, 44 billion dollars in total, even suspended the offer its! “The Twitter agreement has temporarily suspended pending details supporting the calculation that spam / fake accounts actually represent less than 5% of users”, just tweeted the businessman, Tesla boss (+ 4.8% ) and SpaceX, with a link to a Reuters article related to these “false” estimates, article dated May 2. This article from the news agency refers to Twitter’s estimate that the fake accounts and spam accounted for less than 5% of total daily active user revenue in the first quarter. Over time, the social network had 229 million users where ads were offered.
Musk, which proposed in April acquiring the platform for 44 billion dollars, also estimated that one of the priorities was to remove ‘spam bots’ from the network. Musk announced on April 4 that he had acquired more than 9% of the shares on Twitter, a week later than regulations allowed and using a filing typically reserved for passive investors. He then corrected his statement, and has since begun a more concrete purchase offer.
By the end of April, the billionaire said he had secured the financing of his possible takeover bid on Twitter. Since then, Musk has still talked to potential investors. Oracle founder Larry Ellison should also take part in the deal, as should cryptocurrency company Binance. Saudi Arabia must keep a stake. Musk also sold several billion dollars worth of Tesla securities to secure his share in financing.
Remember that Elon Musk will have to pay 1 billion dollars to Twitter if he finally does not follow the agreement that was previously sealed between the two parties. However, note that in another tweet today, Musk added that he is “still committed to getting”. The market didn’t believe it for a while, as the share price was almost 30% lower than its offer price, according to the pre-session trend.
Motorola Solutions (+6.2%), an American firm born from a split from Motorola ten years ago, and active in video and telecom equipment, as well as in software, systems and services, published last night for its first fiscal quarter adjusted earnings per share. of $ 1.70, compared to a consensus of $ 1.58 and a level of $ 1.87 a year earlier. Group revenues were $ 1.89 billion in the quarter ended March, compared to $ 1.77 billion last year. The group therefore exceeded the consensus revenue of 3% during the closed period.
Robinhood (+23.4%). The rise of the online brokerage app is linked to Sam Bankman-Fried, managing director of crypto-asset trading platform FTX, who announced after markets closed yesterday that he had acquired a 7.6% stake in Robinhood’s capital. According to a document filed with the SEC, the American Stock Exchange police, the Emergent Fidelity Technologies company, of which Sam Bankman-Fried is the boss and the major shareholder, acquired a 7.6% stake in it worth $ 648 million. . Founded in May 2019, and based in Nassau, Bahamas, FTX currently has no commercial presence in the United States, but it is one of the largest cryptocurrency trading platforms in the world, competing with Coinbase and Binance.
Its boss and co-founder Sam Bankman-Fried will benefit from the collapse of the Robinhood title, which has been evolving in recent days to its historic lows. In the stock market document, Emergent Fidelity Technologies indicated that it acquired these securities in the belief that they “represent an attractive investment” and specified that it intended to manage this participation as a financial investment. , and “had no intent at this stage to act to change or influence control” of Robinhood. The acquirer, however, reserves the right to “interact with management discussions from time to time” and added that he may purchase in the future other securities, as well as study “options to increase value for shareholders, through, among other things., alternative strategies or operations or management initiatives “of the online broker.
Among other rating giants on Wall Street, Apple rose 2.5%, after being ousted from the throne by Saudi Aramco yesterday in the ranking of first world market capitalization. Tesla recovered 4.8%, seeing Musk’s little interest in Twitter. Amazon gained 4%, Microsoft 1.5%and Alphabet 2.4%.