New York (awp/afp) – World stock markets plunged on Thursday, mostly to three-month lows, panicked by the central banks’ daily more proactive action against inflation, and the possible recession it could train.
European indices closed in the red. Frankfurt, Milan and London lost more than 3% while Paris lost 2.39%. In Zurich, the SMI lost 2.86%.
On Wall Street, the Dow Jones ended down 2.42%, plunging below 30,000 points for the first time since January 2021, while the Nasdaq index lost 4.08% and the broader S&P 500 index, 3.25%.
“Wall Street didn’t take long to lose its enthusiasm from yesterday after (the Fed’s announcements), as other major central banks are also becoming more aggressive in their own fights against inflation,” explained , in a note, Edward Moya, of Oanda.
After the Federal Reserve on Wednesday, the Bank of England also raised its key rate on Thursday, as did the Swiss National Bank, the latter having completely taken investors by surprise.
“When people think about the impact of all central banks moving simultaneously ‘towards broad-based tightening’, ‘they say to themselves: I have some profits left to take, let’s go’, and start selling, explained Maris Ogg, portfolio manager for Tower Bridge Advisors.
“With the Fed’s balance sheet reduction (begun in June) and markets expecting another 0.75 percentage point hike at the next Fed meeting,” traders are wondering “if the Fed is not going astray”, and to go too fast and too strong in its monetary tightening, commented Quincy Krosby, of LPL Financial.
After a gloomy start to the session, the euro and the pound recovered against the dollar, the single currency gaining 1.03% to 1.0552 dollars, while the pound rose sharply by 1.39% to 1.2350 dollars.
On the bond market, although the interest rates on the debts of European countries for the most part continued to climb on Thursday, the tension eased slightly compared to the beginning of the week, in particular on the Italian debt, after a meeting emergency from the European Central Bank on Wednesday.
The ECB instructed its teams to “accelerate” the design of a new “anti-fragmentation” instrument to fight against too wide a spread in rates between countries in the North and countries in the South of the euro zone.
German Finance Minister Christian Lindner said on Thursday that there was “no reason to worry about interest rate differentials in Europe”.
The tech cashes ___
Tech, particularly dependent on interest rates to finance its growth, suffered the blow.
In New York, tech giants led the market decline, from Meta (-5.01%) to Apple (-3.97%), via Microsoft (-2.70%) and Alphabet (-3, 40%).
In Paris, STMicroelectronics lost 6.19% and Dassault Systèmes 2.50%. Deliveroo dropped 6.19% in London.
Energy values suffer ___
Energy sector stocks fell after further cuts in gas supplies from Russian giant Gazprom, whose boss said on Thursday the company would apply its own rules with its products.
In Frankfurt, Uniper lost 9.73% and Siemens Energy 3%. In Paris, Engie fell 7.29% after noting a “reduction in deliveries”, even if it was without “impact on the supply” of customers.
Eni, which announced that Gazprom would only deliver 65% of the requested quantities on Thursday, also fell 4.89% in Milan while Enel lost 2.81%.
On the side, oil and bitcoin ___
The price of a barrel of Brent from the North Sea gained 1.09% to 119.81 dollars and that of a barrel of American WTI gained 1.96% to 117.58 dollars.
Bitcoin took 5.11%% to 20,754 dollars.
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