New York (awp/afp) – Wall Street lost ground again on Wednesday, but European equity markets rebounded, helped by corporate results that were well received by investors, even though interest rate pressure on indices remains strong.
The New York Stock Exchange, which had started in the green, did not go the distance and ended in a net loss, the Nasdaq entering a correction zone.
The Dow Jones index dropped 0.96% and the S&P 500 0.97% while the Nasdaq shed 1.15%. This has caused the tech-heavy index to lose more than 10% since its record high two months ago.
In Europe, Paris took 0.55%, Frankfurt 0.24% and London 0.35%. In Zurich, the SMI yielded marginally 0.03%.
“Inflation and interest rate concerns are not going away anytime soon,” said Oanda analyst Craig Erlam.
In Western economies, the acceleration in price increases is breaking 30-year-old records, for example in the United Kingdom (5.4% in 2021) and Canada (4.8% year on year in December), according to figures released Wednesday.
To stem it, the cycle of normalization of monetary policies was triggered: Western central banks began to gradually reduce the inflow of liquidity injected to support the markets in the face of the health crisis.
The next step will be to raise policy rates. Some market participants are thus preparing for a first rate hike by the US Federal Reserve (Fed) in March, of 50 basis points, which would be the largest since 2000. They initially expected half the magnitude.
In this context, the yields on American debt are at their highest since the start of the pandemic: that with a two-year maturity evolved at 1.05%, while that at ten years stood at 1.85%.
Germany’s ten-year borrowing rate briefly moved back into positive territory for the first time since May 2019.
Bonds “are again, slowly but surely, offering an alternative to equities. If the trend continues, the equity market could experience a serious setback”, comments Jürgen Molnar, analyst for Robomarkets.
Escalation in crude prices ___
Maintaining inflationary pressure, oil prices continued their run up, approaching 90 dollars for a barrel of Brent, their highest since October 2014.
The price of a barrel of Brent crude from the North Sea due in March gained 1.06% to end at 88.44 dollars, in London.
It even reached $89.17 a barrel during the session, a new record since October 2014.
In New York, a barrel of West Texas Intermediate (WTI) for February delivery rose 1.79% to close at $86.96. Since the end of 2021, WTI has gained 15%.
Splendor of luxury ___
Driven in particular by jewelry, the Swiss giant Richemont published quarterly sales above forecasts. In its flight (+5.15% to 141.00 Swiss francs), the title led to other luxury stocks. In Paris, LVMH took 3.67%, Kering 1.96% and Hermès 2.39%.
In London, Burberry shares jumped 6.32% to 1,867 pence after the announcement of encouraging earnings forecasts.
Passed exam for Bank of America and Morgan Stanley ___
Bank of America and Morgan Stanley, the last of the major American banks to publish their results, were better served than their competitors by investors: the first rose by 0.39% to 46.44 dollars, the other by 1.83 % at $95.73. The disappointing publications the previous days from JPMorgan and Goldman Sachs, still down on Wednesday, had put the sector under pressure.
The announcements of UnitedHealth (+0.33% to 462.52 dollars) and Procter & Gamble (+3.36% to 162 dollars) also satisfied brokers.
On the currency side ___
The euro rose 0.16% against the greenback, to 1.1343 dollars shortly before 10:00 p.m. GMT.
The British pound stabilized against the euro, at 83.31 pence to the euro, after a new high since February 2020, buoyed by the prospect of monetary tightening by the Bank of England (BoE) after the new figures of inflation.
Bitcoin fell 1.45% to $41,780.
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