Bank Results Boost Wall Street Growth, Chinese Markets Continue to Decline, Others Rise

On Wall Street, stock prices rose on Tuesday, primarily in the financial sector, thanks to better-than-expected quarterly business results from banks.

Dow Jones strengthened by 1.06 percent, to 34,951 points, while S&P 500 rose by 0.71 percent, to 4,554 points, and Nasdaq index increased by 0.76 percent, to 14,353 points. The S&P 500 banking sector index saw the highest increase, at 1.9 percent, reaching its highest level since early March, when the sector was shaken by the collapse of several banks.

Morgan Stanley, Bank of America, Bank of New York Mellon, and several other banks reported better quarterly business results than expected yesterday. The environment of elevated interest rates, a stable labor market, and economic growth favors bank operations.

– All banks that reported results today achieved higher profits and revenues than expected. Analysts lowered their estimates, allowing banks to surprise positively – explains Tim Ghriskey, a strategist at Ingalls & Snyder.

In addition to the banking sector, the technology sector also saw a strong rise yesterday, by 1.3 percent, with Microsoft’s stock price jumping nearly 4 percent to record levels. The market was positively influenced by data showing further growth in retail consumption, albeit slower than expected. This suggests that inflationary pressures could further weaken and that the U.S. central bank may soon conclude its cycle of interest rate hikes.

The Fed is expected to raise rates by another 0.25 percentage points this month, which will be the last increase in a cycle that has lasted for more than a year.

European stock prices also rose yesterday. The London FTSE index strengthened by 0.64 percent, to 7,453 points, while the Frankfurt DAX rose by 0.35 percent, to 16,125 points, and the Paris CAC increased by 0.38 percent, to 7,319 points.

Chinese Markets Decline for the Third Consecutive Day

On Chinese markets, stock prices fell on Wednesday for the third consecutive day, as investors are concerned about the slow growth of the world’s second-largest economy. The MSCI Asia-Pacific index was down 0.3 percent around 7:00 AM, marking its third consecutive day of decline.

Meanwhile, the Nikkei index on the Tokyo Stock Exchange rose by 0.8 percent, while stock prices in Australia increased by 0.5 percent. In South Korea, Shanghai, and Hong Kong, however, prices fell between 0.2 and 1.2 percent.

Chinese markets remain under pressure due to recently released data showing that the economy is recovering from the coronavirus crisis more slowly than investors had hoped. This is a consequence of weakness in both domestic and foreign demand. Foreign demand will not recover as long as central banks in Western countries raise interest rates due to high inflation, which slows economic growth.

Stock indices in Japan and South Korea are following yesterday’s rise on Wall Street.

Dollar Slightly Strengthened, Oil Prices Fell

On the currency markets, the value of the dollar against a basket of currencies slightly increased. The dollar index, which shows the value of the U.S. dollar against the other six major world currencies, is around 99.94 points this morning, compared to 99.84 points at the same time yesterday. The exchange rate of the dollar against the Japanese currency rose from yesterday’s 138.65 to 138.85 yen.

The U.S. currency also strengthened against the euro, with the euro price sliding to 1.1230 dollars, down from 1.1256 dollars at the same time yesterday.

Oil prices, on the other hand, lost some of yesterday’s gains. The price of a barrel on the London market fell by 0.26 percent to 79.42 dollars, while on the U.S. market, a barrel decreased by 0.46 percent to 75.45 dollars.