22 Aug

Warren Buffett is investing in real estate. The New Zealand dollar has fallen for ten days in a row

August 22, 2023

By JustMarkets

As of Monday’s stock market close, the Dow Jones Index (US30) increased by 0.19%, while the S&P500 Index (US500) added 0.69%. The NASDAQ Technology Index (US100) closed positive by 1.56% yesterday. But analysts still believe that the dollar is poised for further gains, especially as government bond yields rose following positive US economic data. Markets expect the Fed to have to keep rates “higher for longer” in response to robust US data.

Technology stocks rose thanks to a more than 6% rise in NVIDIA Corporation (NVDA) ahead of the chipmaker’s quarterly results due on Wednesday. Nvidia is riding a wave of optimism about artificial intelligence. Shares of Tesla Inc (TSLA) rose more than 6% as investors bought into the electric car maker’s recent stock slump amid a new positive outlook from Wall Street for TSLA. Baird listed Tesla as a “best idea,” noting several favorable factors, including the launch of Cybertruck, wider adoption of self-driving software, and continued growth in the energy business, that could overshadow concerns about margin erosion from recent price declines.

Warren Buffett’s Berkshire Hathaway fund invested in housing, putting $814 million into the shares of 3 homebuilders: Lennar, NVR, and DR Horton. A small bet in the context of Berkshire’s roughly $350 billion equity portfolio, but it speaks to Buffett’s optimism about the housing market in the US, despite its unaffordability today when mortgage rates are near multi-year highs.

Equity markets in Europe traded flat yesterday. Germany’s DAX (DE40) increased by 0.19%, France’s CAC 40 (FR40) added 0.47% on Monday, Spain’s IBEX 35 (ES35) decreased by 0.05%, and the UK’s FTSE 100 (UK100) closed down 0.06%. In its monthly report, Germany’s Bundesbank said, “The German economy remains in a phase of weakness. Output will likely remain largely unchanged in the third quarter of 2023.” In Germany, the PPI (which displays the inflation rate between factories and plants and is a leading indicator of consumer inflation) fell by 6.0% annually, the sharpest drop in 13 years. The main reason for the year-over-year decline in producer prices was lower energy prices, as well as lower prices for intermediate goods.

Crude oil and gasoline prices stopped rising on Monday and closed moderately lower. Economic malaise in China, the world’s second-largest crude oil consumer, threatens to curb its energy demand and has a bearish effect on prices. On the other hand, oil’s fall is limited by a shortage of global crude oil inventories.

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Asian markets were predominantly down yesterday. Japan’s Nikkei 225 (JP225) added 0.37% for the day, China’s FTSE China A50 (CHA50) fell by 1.36%, Hong Kong’s Hang Seng (HK50) lost 1.82% on Monday, and Australia’s S&P/ASX 200 (AU200) ended the day negative by 0.46%.

On Monday, the Nikkei stock index rally reduced demand for the Japanese yen as a safe haven. In addition, the yen is under pressure as data from Bloomberg shows that the Bank of Japan is buying Japanese bonds at a record pace this year as it tries to keep long-term bond yields low as part of its yield curve control program. An update from JP Morgan shows analysts’ interest in the 150 yen per dollar mark as a level that could trigger currency intervention.

The New Zealand dollar is on the verge of the longest losing streak in its history. On Monday, the currency fell for the 10th consecutive day. Such a drop has yet to occur seen since March 2020. If the NZD declines further today, it will be the longest drop in the currency’s history.

S&P 500 (F)(US500) 4,399.77 +30.06 (+0.69%)

Dow Jones (US30) 15,603.28 +29.02 (+0.19%)

DAX (DE40)  15,603.28 +29.02 (+0.19%)

FTSE 100 (UK100) 7,257.82 −4.61 (−0.063%)

USD Index  103.35 −0.03 (−0.03%)

Important events for today:
  • – US Existing Home Sales (m/m) at 17:00 (GMT+3);
  • – US FOMC Member Bowman Speaks at 21:30 (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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