Notifications Bell

Wall Street climbs

Wall Street climbs

Stocks gain despite surprise weak Chinese data

Neither the dismal economic figures from China nor the data on the NY Empire State manufacturing index that fell to levels not seen since the pandemic didn’t stop the upward momentum of the US indices.

China surprised the market by lowering interest rates, unlike the rest of the world's central banks, trying to stimulate the economy, showing alarming signs of weakness.

China's year-on-year industrial production showed a growth of 3.8%, while retail sales fell to 2.7% year-on-year, and fixed asset investments in July only grew 5.7% from 6.1% in the previous month.

Later, the American figure for the NY Empire State manufacturing was released with a drop of -31.30 versus 5.50 expected. This huge deviation alarmed analysts and has once again encouraged the speeches of those who predict a recession in the United States.

But the American stock markets ignored these disturbing data and again experienced widespread increases. Technically, the three main Wall Street indices are already in bullish territory. It can be said that they have left behind the bear market that most investors expected to go on. Yesterday, the portfolios of the main American investment funds were reported, and a good number of them had reduced and even cut their bearish positions.

Despite the latest negative data, the expectation that the Fed will not raise interest rates as much as initially predicted, as well as the latest corporate earnings, are factors that have sparked optimism among investors.

Also playing a big role is that inflation expectations, the main threat to the market for some time, have been lowered substantially. The fall in the price of raw materials, especially oil, contributes to this.

Yesterday it was expected a nuclear agreement with Iran could be reached to eliminate the sanctions that prevent it from exporting oil, allowing it to access the international oil market. If an agreement is reached, it would mean an increase in the supply of around 1 million BPD that would push the price of crude oil down, possibly below $80 per barrel.GráficoDescripción generada automáticamente

Sources: Bloomberg, Reuters

This information/research prepared by Miguel Ruiz (“the research analyst”) does not take into account the specific investment objectives, financial situation or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.

The research provided does not constitute the views of JME Financial Services (Pty)Ltd nor is it an invitation to invest with JME Financial Services (Pty)Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.

As of the date the report is published, the research analyst and his/her spouse and/or relatives who are financially dependent on the research analyst, do not hold interests in the securities recommended in this report (“interest” includes direct or indirect ownership of securities).

The research analyst in not employed by JME Financial Services (Pty)Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation or particular financial needs before making a commitment to invest.

The laws of the Republic of South Africa shall govern any claim relating to or arising from the contents of the information/ research provided.

JME Financial Services (Pty) Ltd trading as ZA.CAPEX.COM acts as intermediary between the investor and Magnasale Trading Ltd, the counterparty to the contract for difference purchased by the Investor via ZA.CAPEX.COM, authorised & regulated by the Cyprus Securities and Exchange Commission with license number 264/15. Magnasale Trading Ltd is the principal to the CFD purchased by investors