Fear of recession is fading. The Fed could use this as an opportunity to tighten monetary policy. Investors are not deterred by this and are boldly grabbing it. The big winner is Tesla with its plans for a lithium refinery.
Buoyed by price gains in technology stocks, the US stock exchanges rose on Friday. The Dow Jones index of standard values gained 1.19 percent to 32,151.71 points. The broader S
The inflation data in the coming week should point the way, which should provide an indication of the pace of interest rate hikes by the US Federal Reserve. Fed Chair Jerome Powell recently announced further tightening. Fed Chairman Chris Waller sees a reduced fear of a recession as the basis for further aggressive interest rates.
Investors now see around an 85 percent chance that the Fed will hike another 75 basis points at this month's meeting. "We've seen more hawkish comments from central banks not just in the US but around the world - from the Bank of England and the ECB," said Matthias Scheiber, global head of portfolio management for multi-asset solutions at wealth manager Allspring. "You can see that in short-term interest rates." These jumped up significantly at times. The two-year federal bonds yielded during the day at an eleven-year high of 1.429 percent.
Central bankers are labeled hawks when they signal tightening monetary policy by raising interest rates or reducing balance sheets. Profit-taking pushed the dollar index, which tracks rates against major currencies, down more than half a percent on Wednesday, which hit a 20-year high. Investors boldly grabbed most commodities because the devaluation of the world's leading currency makes them more attractive for investors outside the USA.
Tesla investors have responded positively to the company's plans to build a lithium refinery in Texas. The shares gained 3.5 percent. The potential plant on the coast of the US state will process the metal required for car batteries. Tesla would thus ensure the supply of one of the most important components for vehicle construction.
Zscaler shares shot up almost 22 percent. The enterprise-focused cloud security company beat analyst estimates for the quarter with adjusted earnings per share of 25 cents a share. The outlook for the 2023 financial year was also a positive surprise. Adjusted earnings should then be in the range of USD 1.16 to USD 1.18 per share. Grocery retailer Kroger gave wings to its shares with a forecast upgrade. The papers increased more than seven percent. The demand for his products remains high despite rising prices.
