NEW YORK (dpa-AFX) – Signs of easing in the trade dispute with China and a strong banking sector created a good mood on Wall Street at the start of the week. After a week of losses, the US stock exchanges gradually expanded their gains in the course of trading.
The leading index Dow Jones Industrial ended up 1.98 percent higher at 31,880.24 points. In the past week it had fallen by 2.9 percent. The market-wide S&P 500
climbed 1.86 percent to 3973.75 points on Monday. After initial losses, the technology-heavy Nasdaq 100 turned positive , which increased by 1.68 percent to 12,034.28 points. “Despite the fear of lockdown after record infection numbers in Beijing, the week starts with a willingness to take risks,” wrote the Landesbank BayernLB.
Experts see the fact that the US government, in view of the high inflation rate, is considering abolishing some of the punitive tariffs on imports from China introduced under the Trump administration as a course support. Investors see this as a possible de-escalation of the trade war between the two economic superpowers, commented stockbroker Pierre Veyret from broker ActivTrades.
The upswing comes as no surprise to some industry experts, as they consider the temporary sell-off on the stock exchanges to be exaggerated. “While an economic slowdown is evident, the question remains whether this is a cyclical slowdown or a recession,” wrote JPMorgan analyst Marko Kolanovic. Markets were increasingly pricing in a recession, but economic data did not seem to point to it.
As in the European trading venues, the banking sector was the winner of the day. Optimism made about the Dow member JPMorgan wide, whose papers rose by a good six percent at the top of the index. In view of the rising key interest rates away from trading in stocks and bonds, the bank expects this year’s net interest income to be more than 56 billion US dollars – after 53 billion previously. The expert Jason Goldberg from the British investment bank Barclays commented that so far he had “only” expected 55 billion.
In the wake of JPMorgan, other financial stocks also posted significant gains. Citigroup and Bank of America
(Bofa) recorded gains of around six percent each. Goldman Sachs shares gained 3.2 percent, while shares in American Express
increased by 3.8 percent.
However, the recently severely depressed prices, especially in the technology sector, are obviously attracting potential takeovers again. The chip company Broadcom is considering buying VMware, according to insiders , a software provider for cloud computing and data center virtualization. The Bloomberg news agency reported on talks between the two parties.
Speculation about this initially drove VMware shares up by around twenty percent. Shortly before the market closed, the “Wall Street Journal” reported a purchase price of $140 per share, citing insiders, and the price gain rose by around a quarter. Broadcom papers, on the other hand, were down a good three percent.
The analysis house Bernstein Research rated the possible deal as positive for Broadcom. Company boss Hock Tan can already show successful acquisitions in the software sector, wrote the expert Stacy Rasgon.
After a disastrous week for retailers, bargain hunters are now taking action. Ross stores , which alienated their investors with a profit warning on Friday, rose by almost ten percent. Walmart’s papers recovered with an increase of almost three percent.
The Euro benefited from the prospect of an end to negative interest rates in the euro area. After the US market closed, the common currency cost $ 1.0686. The European Central Bank (ECB) had set the reference rate at 1.0659 (Friday: 1.0577) dollars, the dollar has cost 0.9382 (0.9455) euros.
On the bond market, the futures contract for ten-year Treasuries (T-Note Future) fell by 0.52 percent to 119.50 points. In return, the yield on ten-year government bonds rose to 2.87 percent./jcf/la/ngu
— by Jan Christoph Freybott, dpa-AFX —
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