Mixed feelings on the US stock exchanges

Mixed feelings on the US stock exchanges
Mixed feelings on the US stock exchanges
Share post:

US stock exchanges apa blog

US stock exchanges: increasing volatility

After a good start to the US reporting season, the tide on the US stock exchanges turned last week. Disappointing figures from the technology sector overshadowed the good results from major US banks, obliterating the Dow Jones’ profits for the year and even dipping it into the red. The technology index Nasdaq Composite, on the other hand, still shows positive year-to-date figures, but has lost around 850 points in October alone, which could mean the weakest October since 2008. A brief surge on Thursday failed to recover the losses.

Towards the end of the week, the weak results of Amazon and Google’s parent Alphabet had a particularly strong impact. Despite billion-dollar profits, both companies disappointed the very high market expectations. The quarterly revenues of both companies failed to meet projections, and analysts and investors appeared to be disappointed in their growth rates. A few days prior, the results of IBM had disappointed investors with declines in both sales and profits, while positive figures from Intel and Facebook weren’t sufficient to mitigate the pessimistic sentiment.

Investors are already looking ahead to 2019

However, corporate figures are not the only reason for the current volatility in sentiment. According to experts, investors are already looking ahead to 2019 – where the outlook for corporate profits has recently become a little more grim as a result of macroeconomic developments. Ongoing trade wars, more volatile oil prices due to political tensions between the US and Saudi Arabia, the budget dispute between the EU and Italy, and the faltering Brexit negotiations are fueling increasing concerns about the state of the global economy.

The latest US economic report, the so-called “Beige Book”, published by the Federal Reserve was rather restrained and saw robust but less dynamic growth for the US economy. At 3.5 per cent, annualised growth in Q3 was significantly weaker than in the previous quarter (Q2 2018: 4.3 per cent), but managed to just exceed expectations.

According to the Fed, the US economy chiefly suffers from uncertainty about further trade policy developments. The US is currently in dispute with China about its trade policy. However, the conflict is also taking its toll on the People’s Republic, with 6.5 per cent in Q3 of 2018 year over year marking the weakest growth since 2009.

The situation on the stock markets is exacerbated further by rising key interest rates in the US. The central bank raised its key interest rate corridor to 2.00–2.25 per cent, indicating four further hikes until the end of 2019. Some central bankers have even spoken out in favour of one more hike in 2018. As a result of higher interest rates, US bond yields have also risen significantly again. The higher interest rate on the bond market tends to make investments in equities less attractive and recently put a strain on the stock markets.


Forecasts are not a reliable indicator for future developments.


Legal disclaimer

This document is an advertisement. All data is sourced from Erste Asset Management GmbH, unless indicated otherwise. Our languages of communication are German and English.

The prospectus for UCITS (including any amendments) is published in Amtsblatt zur Wiener Zeitung in accordance with the provisions of the InvFG 2011 in the currently amended version. Information for Investors pursuant to § 21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH, pursuant to the provisions of the AIFMG in connection with the InvFG 2011.

The fund prospectus, Information for Investors pursuant to § 21 AIFMG, and the key investor document/KID can be viewed in their latest versions at the web site www.erste-am.com within the section mandatory publications or obtained in their latest versions free of charge from the domicile of the management company and the domicile of the custodian bank. The exact date of the most recent publication of the fund prospectus, the languages in which the key investor document is available, and any additional locations where the documents can be obtained can be viewed on the web site www.erste-am.com. A summary of investor rights is available in German and English on the website www.erste-am.com/investor-rights as well as at the domicile of the management company.

The management company can decide to revoke the arrangements it has made for the distribution of unit certificates abroad, taking into account the regulatory requirements.

This document serves as additional information for our investors and is based on the knowledge of the staff responsible for preparing it at the time of preparation. Our analyses and conclusions are general in nature and do not take into account the individual needs of our investors in terms of earnings, taxation, and risk appetite. Past performance is not a reliable indicator of the future performance of a fund. Please note that investments in securities entail risks in addition to the opportunities presented here. The value of shares and their earnings can rise and fall. Changes in exchange rates can also have a positive or negative effect on the value of an investment. For this reason, you may receive less than your originally invested amount when you redeem your shares. Persons who are interested in purchasing shares in investment funds are advised to read the current fund prospectus(es) and the Information for Investors pursuant to § 21 AIFMG, especially the risk notices they contain, before making an investment decision. If the fund currency is a currency other than the investor's home currency, changes in the corresponding exchange rate may have a positive or negative impact on the value of his investment and the amount of the costs incurred in the fund - converted into his home currency.

Please consult the corresponding information in the fund prospectus and the Information for Investors pursuant to § 21 AIFMG for restrictions on the sale of fund shares to American citizens. Misprints and errors excepted.