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Stock Markets Surge on Trade Ease, Strong Consumer Confidence
US stock exchanges started the week on a positive note, with the postponement of trade tariffs and unexpectedly robust consumer confidence driving buying sentiment on Wall Street. Even poor sales figures in Europe could not deter Tesla.
Wall Street showed clear gains after the holiday break, following positive signals from Europe where stock markets had already celebrated the relaxation in the trade dispute between the US and EU the day before. President Donald Trump had postponed the additional tariffs on EU imports to July 9, providing more room for negotiations on a trade agreement. Investors now view US tariff threats as more of a negotiating tactic than a trade policy decision, which reduces the impact on the financial market and boosts stock prices.
The Dow Jones Index surged 1.8 percent to 42,344 points, the S&P-500 and Nasdaq Composite rose by 2.0 and 2.5 percent respectively. Preliminary data showed 2,411 gainers and 380 losers on the NYSE, with 35 stocks remaining unchanged. Additionally, data fueled economic optimism, as US consumer confidence improved much more than expected in May. "Consumer confidence improved in May after having declined for five consecutive months," Stephanie Guichard, an economist from The Conference Board, commented. The orders for durable goods also developed better than expected, despite a significant drop in April.
The dollar recovered from recent losses, with the Dollar Index gaining 0.4 percent. An agreement in the trade dispute with the EU and positive economic data dampened recession fears and spoke against interest rate cuts.
On the bond market, focus was on auctions of two-year Treasury notes and short-term notes. "Today's Treasury auctions are the ultimate test of supply," market strategist Ahmad Assiri of Pepperstone asserted. Demand for the two-year bonds was solid, easing concerns. Subsequently, demand also increased on the secondary market, and yields initially fell further. The yield on ten-year US Treasury notes fell 7 basis points to 4.44 percent - weighed down by reduced interest rate cut expectations. Additionally, hopes of a trade dispute resolution contributed to increased confidence in US assets, benefiting both the dollar and US bonds.
The gold price dropped significantly, losing 1.1 percent, due to a strong dollar, waning interest rate cut fantasies, and increasing interest in US assets. Oil prices declined by 1.0 percent, with the OPEC+ cartel expected to discuss production increases at its weekend meeting.
Tech stocks were in high demand. Nvidia received a boost from plans by a tech giant to offer simpler and cheaper AI chips specifically for the Chinese market from June. The stock rose by 3.2%. On Wednesday after market close, the tech giant will publish its closely watched earnings. Apple showed significant strength, recouping most of Friday's losses, despite US President Trump's threat of 25% tariffs on iPhones made in India.
Qualcomm was granted more time to submit a firm offer to acquire British semiconductor manufacturer Alphawave IP Group. The deadline to submit a firm offer has been extended for the third time, now to Monday. Financial details were not disclosed. Tesla's stock gained 6.7% after Elon Musk stated that he would focus more on leading his companies, while weakening demand in Europe did not appear to impact the stock. Salesforce is poised for a billion-dollar acquisition. The US provider of enterprise software plans to acquire Informatica, a specialist in data management software, for around $8 billion. Eli Lilly is also buying: The pharmaceutical company will acquire SiteOne Therapeutics, a company specializing in pain treatment, for up to $1 billion. PDD Holdings fell by 13.6%. The parent company of the Chinese online retailer Temu reported a sharp drop in profits due to weakening demand in China.
[Source: ntv.de, mau/DJ]
In the broader context, while trade disputes and consumer sentiment continue to influence Wall Street, recent trends suggest a cautious optimism among investors as economic concerns are gradually alleviated.
- Policy discussions in the community and employment sectors may gain traction, as investors focus on long-term business strategies driven by the surge in the stock-market and strong consumer confidence.
- With an increase in investing in the stock-market, technology companies like Nvidia and Tesla stand to benefit from the positive economic outlook and reduced trade-policy concerns.
- As the technology sector flourishes, corporations are looking to mergers and acquisitions in areas such as data management and pain treatment to counteract potential challenges, like the drop in profits experienced by PDD Holdings.
