US markets turn positive, DAX closes deep red – Oil slumps, Gold rises
US stock exchanges shook off their early losses thanks to strong value stocks, but tech stocks continue to fall. The DAX closed with significant losses. Oil fell clearly below 70 US dollars, gold rose.
For you summarized
- Wall Street recovers, tech sector remains in sell-off
- DAX closes around 1.3 percent lower, VW plans cuts
- Oil below 70 USD, Gold above 4,000, Asia in sell-off
Wall Street turns into positive, DAX closes deep red – Oil slumps, Gold rises
At Wall Street, the major indices shook off their early losses and turned uniformly positive. The S&P 500 and the Dow Jones Index each gained 0.2 percent (as of 6:00 PM), while the Nasdaq Composite held 0.1 percent above the zero line. This is mainly because heavyweights such as Johnson & Johnson, Microsoft, and IBM were able to gain.
However, the sell-off in the tech sector continues. Shares of Seagate, Sandisk, and Western Digital lost between around 7.3 and 10.0 percent. Apple managed to recover somewhat from the sell-off, rising 0.8 percent, while Microsoft gained 5.1 percent. The poor sentiment in the tech sector had previously been caused by price increases at Apple (for iPads/MacBooks) and Microsoft (for Xbox consoles), pointing to exploding costs for memory chips and components. Additionally, shares of tech giant SoftBank plummeted 12.5 percent after reports emerged that ChatGPT developer OpenAI might postpone its highly anticipated IPO to next year due to market volatility.
European markets clearly in the red
European stock markets expanded their losses in late trading on Friday. The turnaround in US markets came too late for Europe. The German benchmark index could not escape the global sell-off in the technology sector. The DAX closed around 1.3 percent weaker at 24,681.72 points. This marks a weekly loss of about 1.5 percent, pushing the 25,000-point mark into the distance for now.
Only eleven of the 40 index members were able to post gains. The biggest losers in the DAX were Zalando (-6.3%), facing a BaFin investigation, and Siemens Energy (-5.8%), while SAP (+2.2%) and Beiersdorf (+2.1%) gained. Volkswagen closed 3.9 percent lower. The carmaker is reportedly planning to cut up to 100,000 jobs and close four plants in Germany.
The European Euro Stoxx 50 lost 0.7 percent at the close, while the broad Stoxx 600 fell 0.7 percent.
Commodities, Currencies & Crypto
Crude oil (Brent & WTI): Oil prices fell about four percent. Brent crude traded at $72.20, while US WTI fell to $69.43 per barrel. Although the recently concluded 60-day ceasefire agreement between the US and Iran initially calmed the market, traders remain skeptical. Reports of ongoing tensions and instability in the strategically important Strait of Hormuz continue to cause geopolitical risks. Meanwhile, Saudi Aramco has resumed operations at a key oil terminal to boost exports.
Gold: The gold price has halted its recent correction, hovering above the psychologically important $4,000 mark, rising 1.6 percent on the day to $4,090 per troy ounce. In light of a more robust US economy and a hawkish Fed, several major banks have lowered their short-term price targets for the precious metal.
Euro/US Dollar: The euro showed relative stability, gaining 0.3 percent to $1.1403.
Bitcoin (BTC): The number one cryptocurrency decoupled somewhat from the global tech sell-off, posting a gain of 1.8 percent over the last 24 hours, hovering just above the psychological support line at $60,253. Analysts point to an currently extremely high correlation (around 88%) with the S&P 500, as well as ongoing million-dollar capital outflows from US spot ETFs, weighing on the price. Ether rose 1.5 percent.
Asia: Brutal sell-off pulls markets from record highs
Asian trading saw a veritable tremor overnight as investors took profits in a big way before the weekend. The reason is massive concerns about high valuations and the immense infrastructure costs surrounding artificial intelligence (AI).
South Korea's Kospi index temporarily plunged more than 8 percent and closed 5.8 percent weaker. Shares of Samsung lost 5.3 percent, while SK Hynix fell 8.4 percent. Trading on the South Korean stock exchange had to be suspended entirely for about 20 minutes.
In Japan, the Nikkei 225 slumped 4.2 percent, temporarily falling below the 69,000-point mark. A severe setback after the indices had reached historical highs in the current quarter. The Hang Seng in Hong Kong lost 1.8 percent, while China's CSI 300 fell 3.0 percent.
Author: Ingo Kolf, wallstreetONLINE editorial team
