Caught between the imminent rise in interest rates in the United States and geopolitical tensions in Ukraine, the financial markets have been very turbulent this week.
Tell me how January went and I’ll tell you how the year will be. This correlation, well known to operators, augurs well for 2022 marked by volatility and uncertainty.
The 1.45% drop in the Cac 40 this week is further evidence of this, as is the evolution of the Vix. This index, which measures the implied volatility of the S&P 500 and which measures the level of stress of American operators, has risen above 30 points, its highest level since December 2021 and the spread of the Omicron variant. The escalation of tensions between Ukraine and Russia, which raises fears of a skid at any moment, has sparked a movement of mistrust on the equity markets. Added to this are the many questions about the monetary policy of the US Federal Reserve (read p. 8). Implicit guarantor of stock market stability, the Fed threw a chill on Wednesday night. If an interest rate hike, the first since 2018, seems to be in place for the month of March, the monetary institution led by Jerome Powell has not given a clear indication of its strategy in the months to come. The bets are open. In reality, everything will depend on inflation, which is at its highest for forty years. For their part, investors are now expecting five interest rate hikes fed funds in 2022, compared to three last month.
In Asia, Jerome Powell’s speech went badly: if the Fed raises its rates too quickly, it could destabilize the economies of many emerging countries. In the United States, it is mainly tech stocks that have seen red (read p. 4-5). The Nasdaq Composite index, which groups them, is heading for a fifth week of decline in a row.
In Paris, the Cac 40 is in its third weekly streak in the red, and has lost 2.62% since the 1er January.
CELINE PANTEIX