Monday, November 29

Wall Street celebrated Powell’s appointment, but erased hikes before rate hike


The Nasdaq sank into negative territory after the S&P 500 had previously hit record highs. A rise in Treasury yields weighed on Amazon, Alphabet and other big growth stocks.

Instead, Apple ended up at an all-time high after JPMorgan signaled possible improvements to the iPhone 13 supply in the coming months.

The S&P 500 lost 15.38 points, or 0.32%, to 4,682.88 units, while the Nasdaq Composite fell 202.68 points, or 1.26%, to 15,854.76 units. The Dow Jones Industrial Average rose 17.28 points, or 0.05%, to 35,617.83 points. The S&P 500 value index far outperformed the growth index.

Powell’s appointment was very well received by investors who hoped there would be no major changes at the Fed, while guiding the economy out of the pandemic. The central bank plans to return to pre-virus monetary policy in late 2022.

Fed Governor Lael Brainard, who was the other candidate for the job, will be the vice president, the White House reported.

“Markets like predictability (…) Even if Brainard would have been a good choice, markets would not know what to expect from it even though the general consensus was that it would mean lower rates for longer,” said Randy Frederick, managing director of operations and derivatives at Charles Schwab.

The S&P 500 bank index rebounded, following rising Treasury yields as investors anticipate a tightening of monetary policy in the first half of 2022. Wells Fargo & Co was one of the best performers.

European stocks

European shares closed unchanged on Monday as Germany’s warning of tighter restrictions overshadowed earnings at Telecom Italia following a $ 12 billion proposal from US fund KKR to privatize Italy’s largest telephone group.

The pan-European STOXX 600 Index ended flat after previously falling when the German Chancellor, Angela Merkel said that Europe’s largest economy needed tighter restrictions to control a wave of COVID-19 infections. This came after an increase in Covid-19 cases led Austria to resume lockdowns.

Meanwhile, Telecom stocks gained 1.8%, their best day since March, driven by a jump of 30.3% in Telecom Italia (TIM). KKR reportedly set a target price of 50.5 euro cents for its tender offer, a 45.7% premium over TIM’s closing price on Friday.

Italian mobile tower company Inwit, partly controlled by TIM, gained 4.6% as KKR’s approach created speculative appeal for the company, while TIM’s main investor, Vivendi, was up 2%.

The European benchmark posted its first weekly drop in seven weeks on Friday as concerns about the impact of renewed COVID-19 restrictions hit cyclical sectors like automakers and banks. But those sectors recovered on Monday, with the advance of banks, mining and industrial companies.

In another deal in the telecommunications sector, Norway’s Telenor rose 1.5% after agreeing with Charoen Pokphand Group to merge its Thai units in a deal valued at around $ 8.6 billion.

Sweden’s Ericsson fell 5.6% after the mobile telecommunications equipment maker agreed to buy cloud communications company Vonage for $ 6.2 billion.



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