Stock Market Analysis: Wall Street’s Indecisive Start in the Second Half of 2023

2023-07-03 19:49:00

market report

Status: 07/03/2023 9:49 p.m

On Tuesday, Wall Street fails to provide impetus. This contributed to an indecisive start to the second half of the stock market year. According to experts, however, the technical situation remains favourable.

On the first trading day of a new month, an above-average buying interest can often be observed on the stock markets. That was not the case this Monday. In their abbreviated session ahead of America’s Independence Day, New York stock markets made only modest gains. While the Dow Jones gained just 10 points, or 0.03 percent, the Nasdaq 100 technology index was up 0.19 percent.

In the first half of the year, the Nasdaq 100 was up 39 percent, significantly outperforming the Dow, which was only up 6 percent.

The unexpectedly sharp downturn in US manufacturing sentiment in June had a rather supportive effect due to its possible implications for monetary policy. The purchasing managers’ index fell by 0.9 points to 46.0 points, as announced by the Institute for Supply Management (ISM). That was not only the eighth decline in a row, but also the worst value in more than three years. The barometer is thus moving further away from the growth threshold of 50 points. The US construction industry, on the other hand, is developing somewhat better than expected despite the high interest rates. Construction spending rose 0.9 percent month-on-month in May. In April, growth was only 0.4 percent.

Because of the upcoming Independence Day (Independence Day) was traded in New York only until 7 p.m. CEST. The US stock exchanges will remain completely closed on Tuesday.

After the most recent growth, the DAX started the second half of the year with little power. After a daily high of 16,209 points, profit-taking started in the morning. Since there was no support from Wall Street either, the leading German index closed 0.4 percent lower at 16,081 points. After the price rally of 16 percent in the first half of the year, however, experts see opportunities for further price gains.

Sentiment in the course of trading was dampened by a gloomy mood in the industrial companies in the euro zone. The purchasing managers’ index from S&P Global fell by 1.4 points to 43.4 points in June compared to the previous month. This is the indicator’s lowest level in over three years.

From a chart technical perspective, the picture in the DAX had recently brightened significantly. In order to give the price rally new impetus, however, a jump above the record high (16,427 points) set just two weeks ago would be necessary. However, positive impulses for the DAX do not only come from the chart technology, but also from the statistics. After all, a seasonal recovery phase on the German stock market began on July 1, as IG expert Christian Henke points out.

As today’s trading trend underscores, the market continues to focus on economic data and its implications for the monetary policy of the major central banks on both sides of the Atlantic. In the US in particular, everything revolves around the question of when the Federal Reserve (Fed) will reach the interest rate peak. Against this background, the US labor market report for June, which is due out on Friday, is likely to be the most important date of the current stock market week.

Unemployment has recently been low in the USA, and employment has grown solidly – with wages rising significantly at the same time. This is a toxic mixture for the Fed, because the tight labor market is fueling the already high inflation.

The euro was able to make up for the interim losses over the course of the year. At the moment, the common currency is trading just over $1.09 again.

The price of gold rose slightly. An ounce of gold cost $1,921 late in the evening.

Oil prices gave up their daily gains late in the evening. A barrel (159 liters) of North Sea Brent for delivery in September cost $74.82. That was 0.15 percent less than on Friday. As a result, the funding cuts announced by Saudi Arabia and Russia have had no effect for the time being. The Saudi Energy Ministry said the cut of 1 million barrels a day announced for July would be maintained in August. Russia, on the other hand, announced that it would cut its production by an additional 500,000 barrels in August, Russian media reported. The decisions come on top of cuts agreed by oil cartel Opec and its allies, which are set to last into next year.

Tesla shares posted strong gains. The world’s largest electric car manufacturer exceeded analysts’ expectations with a delivery record in the second quarter. The US company handed over 466,140 cars to its customers in the reporting period. At the beginning of the year, the electric car pioneer reduced the prices for its electric cars worldwide, putting the competition under pressure.

Apple stock was slightly under pressure. Due to technical problems, the technology group is cutting the production targets for the new “Vision Pro” data glasses from one million to less than 400,000 units, as the “Financial Times” reported, citing insiders. The paper cited the complexity of the product as the reason for the forecast reduction. This makes mass production difficult.

In the wage dispute between Lufthansa and the Vereinigung Cockpit (VC) pilots’ union, the signs are not immediately pointing to a strike shortly before the union’s peace obligation expires. A VC spokesman explained that collective bargaining for the approximately 5,200 cockpit employees at Lufthansa and its freight subsidiary Lufthansa Cargo would continue today. There was no information on the status of the negotiations until the evening.

The Post is just called DHL Group

Since the beginning of the month, the “Deutsche Post DHL Group” has only been known as the “DHL Group”. However, the Deutsche Post brand, including the post horn in the logo, will continue to exist; it stands for the national mail business. However, that only accounts for seven percent of group sales, while the various DHL services including parcel shipping account for 93 percent. “What’s on it should be in there,” CEO Tobias Meyer explains the renaming.

The Regensburg car supplier Vitesco enters the spare parts market. The company announced that it would set up its own sales channels with original spare parts. Initially, nitrogen oxide sensors are to be sold, and the range is to be expanded later. The aim is ultimately to sell spare parts for electric cars.

At AstraZeneca, data from a phase III study of a new drug for lung cancer has disappointed investors. Peter Welford from the analysis house Jefferies complained about the lack of details and pointed out concerns about the drug’s safety profile because the British-Swedish pharmaceutical company also reported deaths.

Several US banks have announced higher dividends after passing the Federal Reserve’s stress test. Experts expect further notifications after all 23 money houses examined were successful. JPMorgan plans to raise its quarterly payout by 5 percent to $1.05 per share. Goldman Sachs plans to increase its previous dividend by 25 cents to $2.75.

The Austrian bank Bawag has presented its first estimates for the second quarter after allegations by the activist hedge fund Petrus Advisers about alleged deficiencies in the loan book. The group result should therefore amount to more than 180 million euros in the three months from April to June, the bank announced on Sunday evening. In the same period last year, the money house had generated a surplus of 134 million euros.

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