Paris (awp / afp) – The rise in bond interest rates weighed on the stock markets on Tuesday, while oil prices were at their highest since 2014.
Wall Street, closed on Monday, came out of its long weekend down sharply, especially for the Nasdaq, whose technology stocks are the most sensitive to rising rates in the bond market. It lost 1.72% around 3:00 p.m. GMT, while the S&P 500 fell by 1.42% and the Dow Jones by 1.51%.
European markets also fell: Paris dropped 0.86%, Frankfurt 0.99% and Milan 0.88% and London 0.61%. In Zurich, the SMI dropped 0.70%.
Brent and WTI barrel prices both hit their highest level in more than seven years on Tuesday, boosted by supply disruptions, heightened geopolitical tensions and rising demand.
Around 3:50 p.m. GMT, a barrel of Brent North Sea for March maturity climbed 0.80% to 87.18 dollars, after reaching 88.13 dollars shortly before 8:00 a.m. GMT. The US barrel of WTI for February delivery advanced 1.25% to 84.88 dollars, after a peak at 85.74 dollars.
Many analysts are now considering eventually crossing the 100 dollar mark, which still seemed impossible a few months ago.
This rise in crude oil prices “fuels inflation fears and makes a further acceleration of the US Federal Reserve’s monetary policy change likely,” said Jürgen Molnar, analyst at RoboMarkets.
The announcements that the institution made in mid-January on an upcoming monetary tightening are pushing up interest rates on the bond market.
Yields on US debt are at their highest since the start of the pandemic: at 1.83% for the 10-year maturity and 1.02% for the two-year. The German borrowing rate is approaching zero (-0.03%) for the first time since 2019.
A rise in bond rates generally penalizes equities because it improves the profitability of bonds, assets considered less risky by investors.
This environment encourages investors to be cautious, especially as the earnings season begins. If the profit of the bank Goldman Sachs reached a record in 2021, the weakest fourth quarter displeased investors (-8.24% to 349.74 dollars).
“Most traders are looking to hedge their portfolio with other asset classes ahead of what will be a crucial earnings season,” writes ActivTrades analyst Pierre Veyret.
Oil companies take advantage of soaring prices ___
Oil stocks benefited from this trend. In London, Shell took 1.76% and BP 1.17%. In Paris, TotalEnergies rose by 2.18%.
The American oil and gas giant ExxonMobil, which has committed to carbon neutrality of its operations by 2050, took 1.35%.
Microsoft grants Activision-Blizzard ___
Microsoft has announced its intention to buy, for nearly 69 billion dollars, the American video game giant Activision-Blizzard, which notably publishes “Call of Duty”, “World of Warcraft” and “Candy Crush”.
This is the second big acquisition of the year in the sector, after that of Zynga by Take-Two Interactive (+ 2.27% to 156.16 dollars) for 12.7 billion dollars. Electronics Arts also rose 6.35% to 138.97 dollars while in Paris, the video game publisher Ubisoft jumped 11% to 50.18 euros after the announcement.
Tech is struggling again ___
The rise in interest rates penalized so-called growth stocks such as technology companies, which took advantage the most of the low interest rate environment to finance their developments and support their valuation.
On Wall Street, in the first exchanges, Uber lost 3.52% to 40.03 dollars, Alphabet, parent company of Google, 2.47% to 2,720.29 dollars and Meta, which owns Facebook, 3.79% to $319.32.
On the euro and bitcoin side ___
The European currency fell 0.38% to 1.1365 dollars around 2:55 p.m. GMT.
Bitcoin fell 0.88% to $41,410.
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