“Anti-crisis currency” benefited
Rate hikes dampen Wall Street sentiment
11/03/2022, 10:18 p.m
The prospect of more rate hikes is giving Wall Street a headache. The indices are giving way noticeably. The big tech companies are also suffering from economic concerns. The dollar, on the other hand, can gain.
The shattered hopes of smaller rate hikes by the major central banks have sent Wall Street into a tailspin. Both the US Federal Reserve and its British counterpart, the Bank of England, announced that they would continue to raise interest rates for a longer period of time. Of the Dow Jones Index the standard values closed 0.5 percent lower at 32,001 points. The tech-heavy one Nasdaq fell 1.7 percent to 10,342 points. The broad one S&P 500 lost 1.1 percent to 3719 points.
Fed Chair Jerome Powell said it was “very premature” to consider pausing rate hikes. The peak in interest rates will therefore probably be higher than previously expected. BoE Governor Andrew Bailey made a similar statement. “The focus is on shifting the discussion from the rate of increases to the level and duration of their hawkish policies. As a result, the rhetoric is now much more aggressive,” said Michelle Cluver, portfolio strategist at broker Global X ETFs. “That means the terminal rate is higher, and therefore markets expect rates to stay high for longer.”
dollars on the rise
Interest rate fears and the resulting concerns about the economy drove up the price of the “anti-crisis currency”. Of the dollar index, which tracks the rate against major currencies, gained 1.5 percent to 112.98 points. On the bond market, investors sold the papers of current issues in view of further rising interest rates. Conversely, the yield on the 10-year US Treasury rose six basis points to 4.13 percent.
The papers from Apple, Microsoft and the Google parent alphabet were correspondingly in the red by up to 4.2 percent. According to experts, rising inflation and higher interest rates will devalue the future profits of these high-growth companies. Fears of a slump in demand also pushed down the price of light US oil STI by two percent to $88.22 a barrel (159 liters), and North Sea Brent by 1.5 percent to $94.72 a barrel.
In terms of individual stocks, the shares of the biotechnology company fell Moderna, the streaming company Roku and the mobile chip specialist Qualcomm by up to 7.6 percent due to disappointing prospects for the end of the year. In contrast, the papers from the cruise company Royal Caribbean and the online marketplace specializing in handicrafts were in demand for quarterly figures Etsy, which increased by 8.2 and 14.2 percent respectively. Industrial stocks were also on the up. Airplane maker Boeing climbed more than 6 percent and construction equipment maker Caterpillar rose 2.2 percent.