Shutterstock
Dow Jones surges 600 points boosted by bank and tech stocks – China acquiring dollars to stabilize yuan – Variable mortgage rates about to trigger – OPEC+ members endorse production cut despite US accusations
The Dow Jones surged by 600 points on Monday, boosted by bank and tech stocks, particularly Bank of America, Microsoft, Bank of New York, and Apple.
Bank of America climbed more than 5% on better-than-expected earnings results, Charles Schwab bumped up 1%, and Bank of New York reported adjusted earnings of $1.21 per share, over the $1.09 expected by analysts, as its net revenue jumped 44 percent from a year ago, Barron’s reported.
The biggest point boost for the Dow was shares of Microsoft surging 3.7% in morning trading, which added about 56 points to the Dow’s price.
Apple climbed 3% after Morgan Stanley named it a top pick, investors.com reported.
China’s state banks intervened to defend against the weakening yuan on Monday, according to an exclusive report by US News.
At least six banking sources said China’s major state-owned banks “were spotted swapping yuan for U.S. dollars in the forwards market and selling those dollars in the spot market, a playbook move used by China in 2018 and 2019 as well.”
The move helps state banks to procure dollars when rising U.S. yields have made dollars scarce and expensive. The yuan was trading around 7.1980 per dollar on Monday and is down 11.6% versus the dollar this year.
In a signal that higher payments are ahead, banks are contacting many of their clients who have variable mortgage rates to inform them that they are reaching their trigger, the Globe and Mail reported.
Soaring interest rates are about to send monthly mortgage payments spiraling upward for those holding variable mortgage rates. This will also extend the time it will take to repay those loans.
The trigger rate is the point at which the monthly payment would not be enough to cover the interest owed. Therefore, homeowners must increase their mortgage payments. Those increased payments will only be covering the interest instead of chipping away at the principal of the loan.
Variable rates weren’t too concerning after years of record-low interest rates. Now, amid soaring interest, trigger rates could punish holders of variable-rate mortgages quite significantly.
The White House, escalating its war of words with Saudi Arabia, accused Riyadh of coercing some other nations into supporting the move to cut oil production. On Sunday, OPEC+ member states – including Iraq and Kuwait – lined up to endorse the steep cut to its output target. The Saudi defense minister said the decision was purely economic, Reuters reported.
