US inflation data continue to have an effect: SMI and DAX increase — Asia’s stock exchanges at the end of trading with strong profits

SWITZERLAND

The Swiss stock market is green on Friday.

Of the SMI gained 0.99 percent to 11,230.93 points at the start of trading and remains very firm afterwards.

The small cap indices SPI and SLI are also currently making profits. However, the SPI started trading 0.03 percent lower at 14,240.24 points, while the SLI opened 1.37 percent higher at 1,727.35 points.

The Swiss stock market continued the upward trend at the end of the week. The reason for this is still the unexpectedly significant weakening of inflation in the USA in October. This had already triggered a veritable “short squeeze” the day before, especially in the badly battered technology and growth stocks. Many market participants who had been betting on falling prices were forced to close out their bearish positions.

According to the market, this is now continuing. Because of the moderate inflation, the US Federal Reserve could gradually take its foot off the monetary policy brake and in December “only” raise the key interest rate by 50 basis points and not, as recently, by 75 basis points several times, many investors hope. However, market participants are warning that inflation is still a long way from the Fed’s target of 2 percent. Credit Suisse is sticking to its recommendation to underweight equities. There is still a significant downside risk, it says.

GERMANY

The German stock market can make gains in Friday trading.

Of the DAX rose by 0.24 percent to open at 14,179.39 points and is now climbing further up.

On Friday, the DAX can continue the jump in price from the previous day. After an unexpectedly significant weakening of inflation in the USA the day before, which triggered a rally above the 14,000 point mark, there is still no sign of disillusionment. It is also well received that the Chinese leadership relaxed its strict corona regulations somewhat. The time that travelers have to spend in quarantine has been slightly reduced. The leading index has already gained 5.1 percent this week. “Stocks are rising in a tide-raising scenario,” said market watcher Stephen Innes of SPI Asset Management. Technology stocks were particularly in demand on the US stock exchanges, while stock exchanges in Asia followed the trend with significant price gains. “To say that the response was only positive would be an understatement,” said Innes.

“The reason for yesterday’s movement is quickly explained,” said Commerzbank foreign exchange expert Ulrich Leuchtmann. “October inflation came in lower than all analysts polled by Bloomberg were expecting, making the Fed less likely to hike interest rates very, very much.” A lower expected interest rate makes the dollar less attractive. For stock investors, on the other hand, he provides buying arguments.

Thomas Altmann, portfolio manager at QC Partners, sees a “worldwide signal effect”. Expectations of the turnaround in interest rates in Europe have also fallen. According to Altmann, the German stock market will now be exciting to see how the DAX reacts after jumping over 14,000 points. On the one hand, he sees a kind of compulsion to buy from investors who have been too cautious to date and who are guided by fixed investment models. Some others, however, could already “get scared of heights”.

WALL STREET

Surprisingly low inflation in the US fueled the stock exchanges on Thursday.

Of the Dow Jones jumped by 3.69 percent to 33,712.21 points. The tech-heavy one NASDAQ Composite even jumped by 7.35 percent to 11,114.15 points.

Consumer prices in the US rose less than expected in October. The markets are now again counting on the US Federal Reserve not applying the monetary brakes as hard and loosening the reins a bit.

After three strong trading days in a row, the Dow had come under pressure the day before. Market participants attributed the losses to the results of the midterm elections in the USA, among other things. As of this Thursday, too, there is still no clarity about the future balance of power in the US Congress.

ASIA

The stock exchanges in the Far East went up sharply towards the end of the week.

In Tokyo it went Nikkei with a strong gain of 2.98 percent to 28,263.57 points into the weekend.

In mainland China, the Shanghai Composite 1.68 percent higher at 3,087.29 points. In Hong Kong he climbed hang seng by the close of trading by 7.74 percent to 17,325.66 units.

Hopes for more measured interest rate hikes in the US caused price fireworks on the Asian stock markets on Friday, as had happened before in Europe and the US. The trigger was the inflation data for October from the USA, which again showed a clear increase, but at the same time clearly lower than economists and market participants had expected. This fueled speculation that inflation had finally peaked, with correspondingly favorable consequences for US monetary policy.

On the interest rate futures market, the odds of a rate hike by just 50 rather than 75 basis points rose from 56 to 85 percent in December. In addition, with the development of inflation in the USA, market participants now saw more leeway for the Chinese central bank to support the country’s sluggish economy with looser monetary policy.

The fact that the Chinese leadership relaxed its strict corona regulations somewhat also had a supportive effect. The time that travelers have to spend in quarantine has been slightly reduced.

Editorial office finanzen.ch / awp / Dow Jones Newswires

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