The Russian-American tensions in Ukraine and the approach of the Fed meeting weigh down investors’ morale. The CAC 40 fell 3.97% on Monday to fall to less than 6800 points.
After flying from record to record last year, the markets are brooding. In Paris, the CAC 40 lost 3.97% on Monday to 6,787.79 points. Elsewhere in Europe, the German Dax and the Milan Stock Exchange are on the same line. Wall Street also turns bright red: in session, the Dow Jones index lost 2.40% to 33,449.39 points. The broader S&P 500 index dropped 3.04% to 4,264.31 points, and was 11.2% below its peak in early January, which placed it in the correction zone. Volatile, the Nasdaq fell 3.72% to 13,257.13 points after slipping more than 4%.
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Since its peak at the end of November, the Nasdaq has now dropped more than 15%. Last week, the index of US technology stocks fell 5.6%, recording its worst performance since the start of the pandemic. For its part, the Dow Jones fell 4.5%. In short, Wall Street suffered its worst week since the stock market panic of March 2020.
The fear index soars
A sign of investor nervousness, the Vix, also known as the fear index in that it measures Wall Street volatility, has jumped more than 10 points since the start of the year. Tech stocks are under pressure ahead of the next meeting of the US central bank, the mighty Fed, on Tuesday and Wednesday. Investors fear a faster-than-expected brake on the institution’s monetary policy. They feel it “seems more aggressive, and logically, that’s bad for tech and for growth stocks more generally,” the Baird specialists say.
Some analysts are now talking about a 50 basis point hike in the Fed rate (0.50 percentage point) from the March meeting, while the institution generally proceeds by quarter points (0.25 percentage point). And “it’s not until Wednesday that the stock market will hopefully get a bit more certainty about the pace of the U.S. Federal Reserve’s monetary policy shift. There are therefore still three trading days of uncertainty with the risk that the slide will accelerate, ”estimate the specialists of CMC Markets.
Tensions in Ukraine
Russian-American tensions in Ukraine are also weighing on the trend. In Russia, the Micex index plunged 6.29% and the RTS index 8.55%, weighed down by uncertainty around a possible war in Ukraine, the West accusing Russia of preparing an invasion of the Ukraine and threatening Moscow with particularly painful sanctions if necessary.
“The combination of geopolitical tensions, rising oil prices, high inflation and the prospect of higher interest rates is weighing on stocks,” said CMC Markets.
Disappointing results
At the same time, corporate results do not always come to the aid of indices. On Monday, the Dutch electronics giant Philips lost 4.17% after reporting a 10% drop in turnover in the fourth quarter of 2021. The company expects “in the short term” to “the persistence of significant volatility and headwinds related to Covid-19 and supply chain issues, despite current efforts to reduce them”. Friday Netflix ended down nearly 22%. In question, the forecast announced Thursday by the online video service, which expects a net increase of 2.5 million subscribers in the first quarter, which would constitute the most modest increase for the first three months of the year. since 2010.
(with AFP, Reuters)