The New York Stock Exchange responded to FRB Chairman Jerome Powell’s comment on Monday after signing the best week since the end of 2020, saying it is ready to raise interest rates faster than expected if necessary. , Be more careful. Moreover, the war in Ukraine continues unabated, and recent negotiations have failed to create a ceasefire. Oil resumed rising and Brent’s barrel brushed $ 115 for fear of supply shortages due to sanctions against Russia. The US two-year bond rate exceeded 2.1%, the highest in almost three years.
Two hours after closing, the Dow Jones rose 0.95% to 34,423 points, the broad S & P 500 index fell 0.55% to 4,438 points, and the Nasdaq Composite Index, rich in tech and biotechnology stocks, rose 1.16%. It was 13,732 points. Last week, the three Nasdaq indices rose 5.5%, 6.2% and 8.2%, respectively, the highest week since the end of November 2020.
Earlier that day, the European market was struggling to make a profit, Eurostocks 50 generated 0.53%, DAX 30 fell 0.56% in Frankfurt, and CAC 40 0.57 after a surge of more than 5% last week in Paris. % Has fallen. In Asia, the Nikkei rose 0.65% in Tokyo and the Shanghai Composite ended almost in equilibrium (+ 0.08%).
In the bond market, yields soar following Jerome Powell’s words. Interest rates on 10-year US bonds rose 14 basis points (bp) to 2.29%, the highest since May 2019. The US “two years”, which reflects the evolution of the short rate, rose 15bp to 2.11%. As of the end of December last year, it was about 0.73%. In Europe, the eurozone benchmark 10-year German Bund yield rose 10bp to 0.46%.
The Fed has decided to act against inflation
Therefore, Federal Reserve Chairman Jerome Powell was strong on Monday in his first statement since last Wednesday. Powell said controlling inflation requires “quick” action, adding that the Fed can resort to higher-than-usual rate hikes in some circumstances.
“If, at one or more meetings, we conclude that it is appropriate to act more aggressively by raising the federal funds rate by more than 25 basis points,” he said.
In a new economic forecast released on March 16, the Fed sees the federal funds rate as 1.9% in the median hypothesis, but in December it was 0.9%, a quarter of 6 this year. Increase, that is, the meeting of each Fed. At the end of 2023, the federal funds rate is expected to be 2.8%, which means three twists and will remain at this level of 2.8% at the end of 2024.
However, Jerome Powell’s latest statement shows that the Fed does not hesitate to become more aggressive as needed. St. Louis Fed Governor James Bullard said on Friday that he would need to raise the federal funds rate to “more than 3%” this year in response to “especially fierce” inflation. It was a faction. Burden.
Raphael Bostic, head of antennas in Atlanta, became more cautious on Monday, with the Fed raising rates a total of six times this year (including March 16) and two more in 2023. , Predicted to reach 2.25%. He also sees it as “neutral” to the economy. He was also very keen on reducing the Fed’s balance sheet, which should happen “quickly,” he said.
Planned EU embargo on Russian oil?
Oil prices (a key component of inflation) resumed soaring on Monday. Barrels of US light crude WTI (April futures contract) rose 5% to $ 109.92 on Monday night, and Brent barrels from the North Sea rose 6% to $ 114 (5). Monthly contract)). Crude oil prices were revised by 4% overall last week, but have rebounded by more than 15% following sanctions against Russia since March 16, when the IEA announced fears of a shock to global oil supplies. Ukrainian invasion.
Germany has just signed an energy deal with Qatar, which has expressed resistance, but prices are backed by reports on Monday that the EU government is considering imposing an oil embargo on Russia this week. There is. This weekend, the announcement of several attacks by the Houthi rebels on Saudi Arabia’s oil facilities added a little more oil to the fire.
Gold closed almost in balance (+ 0.01%) at $ 1,929.50 an ounce (April Comex contract) after falling 2.8% last week. On the currency side, the dollar index rose 0.16% in the evening to 98.39 points against a basket of benchmark currencies, while the euro fell 0.17% to $ 1.1030. Bitcoin has fallen 0.7% in 24 hours and is stable at around $ 41,000, according to the Coindesk site.
Diplomatic relations on the brink of a plosive between Moscow and Washington
Expectations for an agreement between Russia and Ukraine that helped boost the market last week have yet to come true. Concerns are also rising about rising global food prices, and Ukraine and Russia are very large grain producers.
In Ukraine, fighting continues in Mariupol, in the southern part of the country, and strikes continue in the capital Kyiv. Ukraine has rejected Russia’s ultimatum asking residents of the strategic port city of Mariupol to surrender. To end his attack, Russian President Vladimir Putin still demands that Ukraine accept Russia’s neutral and territorial claims.
Moscow also warns that diplomatic relations with the United States are “on the brink of explosion.” The Russian Foreign Ministry announced on Monday that it had summoned a US ambassador to Moscow and asked Joe Biden to explain his “unacceptable” remarks about Vladimir Putin, who he described as a “war criminal” last week.
The Chicago Fed’s national activity index, the only “macro” indicator released on Monday in the United States, was 0.51 in February, below the FactSet consensus of 0.55 and after 0.69 in January. In this week’s news, the Richmond Federal Manufacturing Index is set tomorrow, but Wednesday will be the release of new home sales and weekly domestic oil inventory reports.
Thursday features durable consumer goods orders, current accounts, flash composite PMIs, the Kansas City Fed Manufacturing Index, and the announcement of several interventions by the Fed authorities. The University of Michigan Consumer Psychology Index and home sales promises will be announced on Friday.
Value to follow
Anaplan, an American publisher of business planning solutions, surged 27% on Wall Street to $ 64 on Monday. Toma Bravo will certainly buy the group for $ 66 per share, or a total of $ 10.7 billion in cash. The current CEO, Frank Calderoni, will continue to be responsible for Anaplan after the transaction. This offer features a 46% premium over the 5-day weighted average until March 18. The transaction has been unanimously approved by Anaplan’s Board of Directors and is expected to close in the first half of 2022, subject to customary conditions such as shareholder and regulatory approval.
Warren Buffett’s Berkshire Hathaway (+ 2%) has announced that it has acquired insurance company Alleghany (+ 24%) for $ 11.6 billion. Alleghany Corp is a New York-based American insurance company that owns, for example, the reinsurance company TransRe and the company RSUI. Buffett recently lamented the lack of investment opportunities, but Berkshire has announced a substantive business, strengthening its already fortunate portfolio of insurance, including Geico and Gen Re. Berkshire offers $ 848.02 per Allegheny share, with a premium of over 25% at the closing price on Friday. The transaction is expected to close in the fourth quarter of 2022.
Nielsen, whose stock price soared recently on Wall Street due to speculation about a possible acquisition, fell 8% today. The group announced yesterday that it has rejected a € 9.1 billion offer from the Private Equity Consortium. The group believes that this offer does not reflect the value of its activities. Earlier this month, the U.S. marketing group reported on a possible takeover bid under consideration in a $ 15 billion file containing debt from a consortium of Elliott Management. Especially benefited from the stock market.
Nielsen said yesterday that the consortium he refused to offer offered $ 25.4 per share. The Group’s board unanimously rejected this proposal, which significantly underestimates Nielsen.
Boeing (-4%). China Eastern Airlines 737-800 crashed in the mountainous region of southern China (Guangxi Zhuang Autonomous Region) on Monday afternoon. The status of the accident is currently unknown. The accident was confirmed by China’s Civil Aviation Authority and said it had 123 passengers and nine crew members on board. According to “Flight Radar,” the plane had only been flying for six years. This is the first fatal accident, including the 737-800 since January 8, 2020.
General Motors (-2%) announced that it has acquired a stake in SoftBank, a GM subsidiary specializing in autonomous driving, for $ 2.1 billion.
Baker Hughes (+ 5%), Halliburton (+ 5%), or Schlumberger (+ 4%) will stop all investments in Russia. Facebook’s parent company, Meta Platforms (-3%), has confiscated Russian courts and objected to the Russian authorities’ inclusion in the list of so-called “extremist” organizations, but reportedly failed.
Nike (-1%) has released a quarterly account after trading on Wall Street tonight. The consensus for this period was adjusted earnings per share of 71 cents, resulting in revenue of $ 10.6 billion. As of the end of December, last published in the second quarter, the comma brand had net income of $ 1.34 billion, or 83 cents per share. Revenues reached $ 11.36 billion, compared with $ 11.24 billion in the previous year.