The US stock exchanges extend their slight losses from the previous day. Threats from China over US leader Nancy Pelosi's visit to Taiwan weighed on sentiment. Only the armaments industry benefits from the precarious situation in Taiwan.
The dispute over a visit by US top politician Nancy Pelosi to Taiwan is getting on the nerves of Wall Street investors. "It's very difficult to assess the risks," said portfolio manager Mohammed Kazmi of private bank UBP. "While the impact of an escalation in tensions between China and the US would be large, markets currently view this as unlikely."
The Dow Jones Industrial closed at minus 1.23 percent to 32,396.17 points, slightly above its daily low reached just before. The market-wide S
At the same time, however, investors sought protection in "safe havens" such as the world's leading currency. The dollar index, which tracks the rate against major currencies, rose 0.7 percent to 106.15 points. The "anti-crisis currency" gold, on the other hand, fell by 0.6 percent to $1,760 per troy ounce (31.1 grams). Treasury bonds were also in demand, with yields on 10-year US bonds temporarily falling to four-month lows before leveling off again at 2.767 at the close. Immediately after Pelosi's arrival in Taipei, China announced maneuvers near Taiwan in the coming days. The government in Beijing regards the island as a breakaway province. According to insiders, the People's Republic had previously held "provocative" military exercises in the region.
Against this background, investors got into US defense companies. Lockheed Martin, Northrop Grumman and Raytheon shares are down as much as 2.4 percent. The United States does not maintain official diplomatic relations with Taiwan, wrote analyst Sheila Kahyaoglu of investment bank Jefferies. However, a law obliges the government in Washington to support Taiwan in maintaining its defense capability.
Caterpillar, on the other hand, had long faces, where surprisingly low quarterly sales of $14.25 billion and a decline in operating margin to 13.6 percent weighed on sentiment. Thanks in part to lower taxes, net income was a positive surprise at $3.18 per share, analyst Matt Elkott from asset manager Cowen pointed out. In addition, the construction machinery manufacturer has raised prices more than they have in two years. Shares still fell 5.71 percent.
The papers from Uber were in demand after the driving service broker announced a surprisingly high operating profit and a cash inflow for the first time. "These results are particularly impressive given the growing number of economic and other risks," said analyst Rohit Kulkarni of brokerage house MKM Partners. Uber shares are up almost 19 percent at the top, as strong as they were two and a half years ago. In their wake, rivals Lyft and DoorDash advanced 16.4 percent.
Pinterest beckoned with a price increase of 11 percent, the largest daily gain in two years. The quarterly result of the online photo pinboard was better than expected, commented the analysts at the investment bank RBC Capital Markets. The shares were also boosted by the new management's drive and the rise of activist investor Elliott to become the largest shareholder.
