New York (awp/afp) – After a week of anxious waiting, the stock markets took a hit after the speech by the president of the American central bank (Fed) on Friday, who forcefully reaffirmed his will to fight inflation, even if it means penalizing economic activity.
On Wall Street, the Dow Jones dropped 3.03% dropping more than 1,000 points, its worst performance in a session since mid-May, more than three months. The Nasdaq index lost 3.94%, and the broader S&P 500 index, 3.37%.
Same trend, a little less marked, in Europe, where Frankfurt (-2.26%), Milan (-2.49%), Paris (-1.68%) and London (-0.70%) fell in end of the session, ending down for the week as a whole. In Zurich, the SMI lost 1.10% on Friday and 1.9% over the week.
The movements were also significant on the other markets, with a further sharp rise in interest rates on government bonds, particularly in Europe: the German yield for the 10-year bond rose to 1.38%, whereas that it was still only 0.89% on August 15. The gap with the Italian rate was also widening.
Returning above parity with the euro before the intervention of the President of the Fed, the dollar took off with a bang in stride against the single currency, but also the Swiss franc, the pound sterling or the yen
Around 8:25 p.m. GMT, it gained 0.06% to 0.9969 dollars for one euro.
Fed Chairman Jerome Powell confirmed the institution’s guidelines: the American central bank will “vigorously use its tools” to curb inflation, which will lead to “a long period of weaker growth”, but there Giving up would, he says, be even more damaging to the economy.
The slowdown in US inflation in July, measured in particular by the PCE indicator, published on Friday, is not enough to lower our guard, he also commented.
“We expected a + hawkish + speech (in favor of a strict monetary policy, editor’s note), it was more than expected. It left no door” of exit for investors who anticipated an easing, believes Lionel Melka, director of research at Homa Capital.
This drop in shares erases for the markets part of the gains accumulated this summer, when investors had leaned towards “chimeras” of a more flexible monetary policy, according to Mr. Melka.
Pressure on gas and electricity in Europe ___
In the euro zone as in the United Kingdom, the rise in energy prices, particularly gas and electricity, is putting even more pressure on the economy.
The price of European natural gas on the benchmark market, the Dutch TTF, remained close to its closing record on Thursday, at 306.00 euros per megawatt hour.
In a crazy week for energy prices in Europe, wholesale electricity prices for 2023 in Germany and France broke new records on Friday at 995 euros and more than 1,130 euros per megawatt hour (MWh) respectively with increases of around 25% over the session. These prices were around 85 euros a year ago.
The Czech Presidency of the European Union has announced that it wants to convene an emergency meeting on the energy crisis.
Technology stocks penalized ___
The Fed’s determination to raise its key rates, which then affects the debt market, penalized technology stocks more heavily, as they are very sensitive to financing conditions, which are essential for their growth.
Amazon (-4.76%), Alphabet (-5.44%), and even Apple (-3.77%) all slumped, as did graphics card maker Nvidia (-9.23%) and the software publisher Adobe (-5.67%).
Tech companies whose results were unconvincing were even harder hit, such as computer manufacturer Dell Technologies (-13.53%), online installment specialist Affirm (-21.33%).
Electronic Arts floated (+3.57%), driven by information from the Swedish media GLHF, according to which Amazon was about to make a takeover offer for the video game publisher.
In Europe, meal delivery platforms have also slipped, such as Just Eat (-7.79%), HelloFresh (-7.21%) or Deliveroo (-5.64%).
On the oil side ___
Oil prices ended higher. The barrel of Brent from the North Sea, the benchmark for crude in Europe, for delivery in October, gained 1.66%, to 100.99 dollars, and the barrel of West Texas Intermediate (WTI), for delivery the same month , 0.58% to $93.06.
Bitcoin fell 3.90% to $20,735.
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