Thus, the Dow Jones gained 0.4%, the technological Nasdaq 0.6% and the S&P 500 0.4% at the closing bell, reversing losses from the start of the day, and from the previous session, after four consecutive weeks on the rise and before a likely moderation in rate hikes by the Federal Reserve following a slowdown in inflation.
The People’s Bank of China unexpectedly cut rates on Monday, after the second largest economy in the world released July data on industrial production and retail sales that missed most analysts’ estimates.
China’s tight COVID-19 restrictions have slowed activity in its major manufacturing hubs and popular tourist spots such as Shanghai, as the deep downturn in the real estate market continues.
Also, in the United States, manufacturing activity in the New York area registers its steepest decline since April 2020 in Augustaccording to the Empire State index published this Monday by the Fed. The index fell 42 points, up to -31.3, recording its second largest drop since the survey began and standing at one of the lowest levels in its history, according to the survey of manufacturers in the region. Activity is considered to be contracting when the index is less than zero.
But investors saw in these negative data a support to their hope that the Fed will be softer than expected with its monetary tightening. “The Fed will stop before (raising its guide rates) if inflation subsides, and it is more likely that (the rise in prices) will subside if the world economy moderates” its growth, explained Chris Low of FHN Financial.
This Monday the defensive values, those that depend less on the situation, were the most sought after, such as Coca-Cola (+1.3%), McDonald’s (+1.2%) or Comcast (+1.4%).
The day was animated by the announcement of the entry into the capital of Disney (+2.2% to $124.26), investment firm thirdpoint, for about 1,000 million dollars, according to a source close to the negotiations.
The laboratory modern, hit last week, recovered on Monday (+3.2% to $176.78), helped by the authorization of the British regulators to commercialize its new specific anti-covid vaccine for omicron.
For its part, the dollar strengthened after news of the Chinese central bank’s action amid disappointing data. The dollar index, which compares the greenback to a basket of six major currencies, gained 0.8%, and the euro fell 1%.
The prices of oil lost up to almost 4% on concerns about demand after weak data from China, one of the world’s largest importers of crude oil.
Gold fell 1%, hitting its lowest in a week, amid sharp falls in all precious metals due to the strength of the dollar and concerns about new rate hikes by the Fed, which increased pressure on bullion.
Source: Ambito
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