Business MARKETS USA / Inconsistent - US-Chinese tensions dampen buying...

MARKETS USA / Inconsistent – US-Chinese tensions dampen buying mood | 5/22/20

NEW YORK (Dow Jones) – The US stock markets were mixed at the end of the week. Concerns about an intensification of the simmering tensions between Washington and China and the upcoming long holiday weekend made investors hesitant. Larger taxes, however, prevented the fact that the numerous restrictions that had been imposed due to the corona pandemic were also gradually being relaxed in the United States. Investors have hopes that the economy will recover soon.

In this mixed situation, the Dow Jones index fell by 9 points to 24,465 points, but at times had been more clearly in the red. The S & P-500 gained 0.2 percent, while the Nasdaq composite rose 0.4 percent. There were 1,532 (Thursday: 1,542) course winners and 1,388 (1,395) losers. 75 (80) titles closed unchanged.

Tensions between the United States and China have been fueled by the proposed “security law” for Hong Kong that the National People’s Congress in Beijing has put to the vote. In view of the mass protests by the Hong Kong democracy movement last year, the law is intended to tighten the “enforcement mechanisms”. The Hong Kong stock exchange then suffered drastic losses as a result of fears that the protests would flare up, and the law also jeopardized the Special Administrative Zone’s status as a leading global financial center.

US president Donald Trump China immediately threatened to react if Beijing tried to gain greater control over the former British colony. If China advances with the measures, he will tackle the issue consistently, Trump said. US senators have already announced plans to sanction Chinese officials and institutions that enforce the security law.

The market has somehow gotten used to the corona pandemic and the terrible economic indicators, says David Madden, market analyst at CMC Markets. The potential consequences of a trade war are likely to prove too much for investors.

The US President had recently tightened his rhetoric against the background of the corona pandemic, which originated in China, and repeatedly accused Beijing of misinformation. In the markets, this had led to concerns that the US could impose trade sanctions on China.

Important economic data was not released in the United States before the long weekend. There is no trading on Monday because of “Memorial Day”. Trading on the US bond market was already shortened this Friday and ended at 8 p.m. CEST.

Safe ports with increased uncertainty are in demand

The gold price rose given the uncertainties surrounding Hong Kong. The price of the troy ounce rose 0.6 percent to $ 1,735. Bonds were also in somewhat greater demand among investors. The yield on ten-year US government bonds fell 1.2 basis points to 0.66 percent as prices rose.

The dollar proved to be firmer on the currency market as a supposedly safe currency haven. The dollar index gained 0.4 percent. The euro slid just below the $ 1.09 mark against 1.0947 on Thursday evening. On the free tradable offshore yuan, the greenback was around 7.1450 yuan, after it had been 7.1284 the previous evening.

Meanwhile, oil prices eased sharply, worried that a flare-up in the trade dispute could reduce Chinese oil demand. China is considered the largest oil importer. The Beijing leadership also raised doubts about the recovery of the Chinese economy, which had officially foregone growth forecasts for the domestic economy for 2020 for the first time in more than 25 years. A major drop in prices prevented the news that more and more oil wells in the US are temporarily being cut because they are no longer worthwhile because of the price drop. The number of “active” oil wells dropped by 21 to 237 this week, said Baker Hughes, an industry supplier. It was the tenth consecutive decline. The price of the US variety WTI dropped 2.0 percent to $ 33.25. The European reference variety Brent lost 2.6 percent per barrel to $ 35.13.

Nvidia firmer by good numbers – Hewlett Packard buckle

Nvidia grew by 2.9 percent. The US graphics card specialist is one of the winners of the Covid 19 pandemic and increased its sales and profits significantly in its first quarter. On the one hand, society benefited from the fact that many people now work from home, on the other hand, the use of video games grew. Nvidia was optimistic for the current quarter and expects further sales growth.

IBM, however, fell 0.6 percent. The IT group is cutting jobs for the first time under the leadership of its new boss Arvind Krishna. With the Job cuts, the exact number of which has not been given, the company claims to try to be more flexible and to stimulate its growth again. IBM is suffering from the pandemic.

Hewlett Packard Enterprise shares plummeted 11.5 percent. As a result of a massive drop in sales in the second quarter, the company posted a large loss. The company has now decided on a three-year plan to save $ 1 billion in costs.

Alibaba ‘s figures were also disappointed; the share fell 5.9 percent. The Chinese e-commerce company increased sales by 22 percent in the fourth quarter, but profits slumped by 88 percent. Because of the exit restrictions, more food was bought online, but less clothing and decorative cosmetics, Alibaba reported.

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

DJIA 24,465.16 -0.04 -8.96 -14.27

S & P-500 2,955.45 0.24 6.94 -8.52

Nasdaq Comp. 9,324.59 0.43 39.71 3.92

Nasdaq-100 9,413.99 0.38 36.00 7.80

US bonds

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

2 years 0.17 1.6 0.15 -103.3

5 years 0.34 0.5 0.33 -158.8

7 years 0.51 -1.2 0.52 -174.2

10 years 0.66 -1.2 0.67 -178.5

30 years 1.37 -1.2 1.38 -169.4

CURRENCIES last +/-% Fri, 9: 02 Thu, 17:20% YTD

EUR / USD 1.0904 -0.40% 1.0926 1.0947 -2.8%

EUR / JPY 117.32 -0.46% 117.31 117.92 -3.8%

EUR / CHF 1.0590 -0.34% 1.0600 1.0618 -2.5%

EUR / GBP 0.8955 -0.00% 0.8952 0.8960 + 5.8%

USD / JPY 107.60 -0.06% 107.38 107.71 -1.1%

GBP / USD 1.2175 -0.40% 1.2202 1.2218 -8.1%

USD / CNH (offshore) 7.1452 + 0.13% 7.1448 7.1284 + 2.6%

Bitcoin

BTC / USD 9,154.76 + 0.66% 9,097.26 9,114.26 + 27.0%

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

WTI / Nymex 33.46 33.92 -1.4% -0.46 -43.2%

Brent / ICE 35.26 36.06 -2.2% -0.80 -44.5%

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

gold (Spot) 1,735.22 1,725.70 + 0.6% +9.52 + 14.4%

Silver (spot) 17.19 17.00 + 1.1% +0.19 -3.7%

Platinum (spot) 835.60 827.75 + 0.9% +7.85 -13.4%

Copper future 2.40 2.43 -1.4% -0.04 -14.8%

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Contact the author: [email protected]

DJG / DJN / cln

(END) Dow Jones Newswires

May 22, 2020 16:11 ET (20:11 GMT)

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