February 23, 2024

Earnings Optimism Gives Stock A Boost And Dollar Gains

On Wednesday, a gauge of global stocks recorded gains for the fourth consecutive session, thanks to optimism over the beginning stages of the corporate earnings season in the US. Meanwhile, the US dollar climbed just ahead of the interest rate decision from the European Central Bank (ECB) on Thursday.

Stocks higher

Stocks on Wall Street were trading higher due to gains on the Nasdaq Composite index, as a positive outlook from Netflix Inc. gave growth stocks a boost. The streaming giant also saw its shares rise by 7.36%.

Around 60 companies that belong to the S&P 500 have already reported their earnings for the second quarter session and 78.3% of this number have managed to exceed analysts’ expectations. While this was slightly below the 81% beat rate seen in the last four quarters, it was still above the 66% rate that had been seen in 1994.

Market analysts said that the markets had some positive surprises in store, even if they were companies that just didn’t perform as badly as expected. There was a 0.15% rise in the Dow Jones Industrial Average, which climbed by 47.79 points to reach 31,874.84. A 0.59% gain was also recorded in the S&P 500 which rose by 23.21 points to reach 3,959.9. As for the Nasdaq Composite, it gained by 1.58%, or 184.50 points to reach 11,897.65.

The US dollar had recorded declines for three days consecutively and had reached two-week lows because of a change in expectations about the interest rate hike from the ECB and the US Federal Reserve. But, the greenback was finally able to see a rise.

Bank’s decision

The market believes that the ECB will hike the interest rate by 50 basis points and the Fed will hike it by 75 basis points, as both central banks are trying to tame inflation numbers in their respective jurisdictions.

As for last week, things had been different as a 25 basis points increase had been expected from the ECB and the Fed had been expected to increase it by 100 basis points. Market analysts said that worries of inflation would continue to linger for some time. This is because even though central bankers are making an effort, it takes time for the monetary policy to affect inflation. It is the supply side that will provide relief to inflation in the near term.

European markets

There was a 0.21% drop in the continent-wide STOXX 600 index and a 0.54% gain in the MSCI’s gauge of world stocks. The latter climbed to a three-week high after four consecutive days of gains to reach 617.30.

Meanwhile, European shares ended up snapping a winning streak of three sessions. The shares ended lower because of the uncertainty regarding gas supplies from Russia and because of the political turmoil that is happening in Italy. While Prime Minister, Mario Draghi was able to win the confidence vote, there were three parties of the coalition who did not vote, which derailed his administration.

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