2023-05-19 22:40:12
(Photo: Getty Images)
MARKET REVIEW. The New York Stock Exchange finally ended in the red on Friday, cut in its tracks by the interruption of talks on the American debt ceiling which are now on “pause”.
The strength of the energy sector allowed the Toronto Stock Exchange to close with a slight gain.
To (re)consult market news
Stock market indices at closing
In Toronto, the S&P/TSX collected 53.97 points (+0.27%) at 20,351.06 points.
In New York, the S&P 500 ended down 6.07 points (-0.14%) at 4,191.98 points.
The Nasdaq fell 30.94 points (-0.24%) to 12,657.90 points.
The DOW ended down 109.28 points (-0.33%) at 33,426.63 points.
The loon rose by US$0.0002 (+0.0274%) to US$0.7409.
The oil retreated US$0.15 (-0.21%) to US$71.71.
L’or advanced US$19.80 (+1.01%) to US$1,979.60.
The bitcoin advanced US$107.71 (+0.40%) to US$26,841.55.
The context
The leader of the Republicans in the House of Representatives Kevin McCarthy showered the optimism which reigned the day before on the negotiations affirming at the end of the morning that they had to be put “on pause”.
A few moments earlier, the White House admitted to stumbling over “real differences” with the Republican opposition and indicated that the discussions were “difficult”.
Much is at stake as time is running out to allow the United States to borrow again before June 1, or the country could default on its debt, a catastrophic eventuality for global financial markets.
Immediately after this news, equities reversed course, bond rates slowed their rise and above all, gold, the ultimate safe haven, jumped $19 to $1,978.90 an ounce.
“The disappointment over the debt negotiations is certainly” at the origin of the depression of the actions, indicated Jack Ablin of Cresset Capital.
“What you have to look at is gold, it’s a very good barometer of the debt ceiling debate,” he added.
Gold, the big beneficiary
The analyst recalled that in 2011 when the United States had come close to defaulting to the point of seeing the debt rating of the world’s largest borrower lowered by a rating agency, gold had been “a big beneficiary”. panic in the markets.
“It’s the safe haven”, because in the event of a threat of default “the dollar will go down, bond yields will go down and equities will go down”, he warned.
On the bond market, yields on two-year Treasury bills lost some of their range to 4.29% against 4.33% in the first part of the session and 4.25% the day before.
Added to this pessimism about the talks between the administration and the White House were reactions to comments by US Treasury Secretary Janet Yellen on the banking sector that put investors off.
The latter said Thursday before a meeting of CEOs of major banks that other bank mergers might be “necessary”, according to echoes in the press published on Friday.
After the crisis of the regional banks which saw several establishments put the key under the door or be repurchased in disaster, these comments “suggested that the situation is perhaps worse than one thinks”, commented Jack Ablin.
Shares of regional banks, although up at the start of the session, took a nosedive as PacWest (PACW, -1.88% to US$5.73), Western Alliance (WAL, -2.44% to US$34.32) and Zion’s (ZIOn, -1.73% to US$26.77).
As for Jerome Powell, the boss of the Fed, who spoke during a conference on monetary policy, he assured that “no decision” had been taken on interest rates for the next meeting of June.
For Edward Moya of Oanda, the Fed Chairman has “paved the way for a pause” in rate hikes. But for Pat O’Hare of Briefing, these statements were “flavorless”.
Is popular, Disney (DIS) fell 2.57% to US$91.35 after announcing that it was forgoing the construction of a campus for its nearly billion-dollar employees in Florida as the entertainment group is in full quarrel with the governor of the State, Ron DeSantis.
The bank Morgan Stanley (MS) fell 2.66% to US$82.24 after its CEO James Gorman, 64, announced on Friday that he intended to step down within the year, sparking a race for his succession.
sports shoe distributor Foot Locker (FL) collapsed 27.24% to US$30.21 as its results were disappointing in the first quarter and the brand lowered its full-year earnings forecast.
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