13 Jun

Investment banks believe in rising indices. Chinese airliner C919 made its first commercial flight

June 13, 2023

By JustMarkets

At the close of the stock market yesterday the Dow Jones Index (US30) increased by 0.56%, and the S&P 500 Index (US500) added 0.93%. Technology Index NASDAQ (US100) closed Monday positive 1.51%. Investors were confidently buying stocks yesterday ahead of important inflation data today. One of the main reasons for the buying is Goldman Sachs raised its year-end forecast for the S&P 500 to 4500 points from 4000 points. Analysts believe that if incoming data for June and July show that US inflation will decline, there is a high probability that the Fed will finish raising rates this cycle.

The US inflation data for May will be released today. Inflationary pressures are expected to fall, which will increase the likelihood of a pause at tomorrow’s US Fed meeting.

The US federal government’s budget deficit for the first eight months of the fiscal year reached $1.16 trillion, up 191% from a year ago. Growth in interest expense has been the main driver of spending growth so far in the fiscal year. However, that spending declined in May because of lower interest payments on inflation-protected Treasury securities.

Shares of Advanced Micro Devices Inc (AMD) jumped by 8% ahead of a presentation today. The chipmaker is likely to unveil updates to its data center and AI technology.

Stock markets in Europe were mostly up Monday. Germany’s DAX (DE30) gained 0.93%, France’s CAC 40 (FR40) added 0.52%, Spain’s IBEX 35 (ES35) jumped by 0.37%, and the British FTSE 100 (UK100) closed up by 0.11% yesterday.

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Jonathan Haskell of the Bank of England’s Monetary Policy Committee said yesterday that the central bank might have to raise interest rates more than once from their current levels in order to get inflation under control. Britain’s economy looks set to avoid recession this year, but deep-rooted problems such as weak business investment will persist, the trade body the Confederation of British Industry said Monday.

The ECB has to balance raising borrowing costs to reduce demand and curb inflation without causing a deep economic downturn. Revised data last week showed that Eurozone GDP unexpectedly contracted by -0.1%, marking the second quarter of contraction and meeting the technical definition of a recession. Investors have new concerns that the region will not handle the aftermath of the war with Russia as well as anticipated, casting doubt on the more optimistic outlook for 2023

Crude oil prices fell by 4% on Monday. It was all due to comments from Iran’s supreme leader on a possible nuclear deal with the United States, which would open Iran’s access to the world market of oil products.

Asian markets traded higher yesterday. Japan’s Nikkei 225 (JP225) increased by 0.52% for the day, China’s FTSE China A50 (CHA50) added 0.45%, Hong Kong’s Hang Seng (HK50) was up by 0.07% for the day, and Australia’s S&P/ASX 200 (AU200) was not trading yesterday.

Most Asian stocks rose Tuesday, following strong gains on Wall Street, as markets bet that the Federal Reserve will suspend its rate hike cycle this week, while an interest rate cut in China also boosted sentiment in the region.

Chinese airliner C919 made its first commercial flight. China plans to build the airliner from its own components, in order to be less dependent on parts from the US and Europe. But in a broader context, import substitution efforts are not yet sufficient. It is estimated that 40% of C919 parts, including the engine, are imported from French Safran and US General Electric.

S&P 500 (F) (US500) 4,338.93 +40.07 (+0.93%)

Dow Jones (US30)34,066.33 +189.55 (+0.56%)

DAX (DE40) 16,097.87 +148.03 (+0.93%)

FTSE 100 (UK100) 7,570.69 +8.33 (+0.11%)

USD Index 103.62 +0.06 (+0.06%)

Important events for today:
  • – Australia NAB Business Confidence at 04:30 (GMT+3);
  • – UK Average Earnings Index (m/m) at 09:00 (GMT+3);
  • – UK Claimant Count Change (m/m) at 09:00 (GMT+3);
  • – UK Unemployment Rate (m/m) at 09:00 (GMT+3);
  • – German Consumer Price Index (m/m) at 09:00 (GMT+3);
  • – Eurozone German ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
  • – Eurozone ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
  • – US Consumer Price Index (m/m) at 15:30 (GMT+3);
  • – UK BOE Gov Bailey Speaks at 17:00 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.


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