(CercleFinance.com) – Wall Street should open lower on Friday morning, chaining a third consecutive session of decline in the wake of the Fed’s desire to continue its rate hikes despite concerns about growth.
Half an hour before the opening, the futures contracts on the major New York indices yielded between 0.5% and 1%, announcing a new start to the session in the red.
The trend is still suffering from the Federal Reserve’s decision to continue its interest rate hikes for the time being, but also from the recent resurgence of volatility observed on the markets.
Unsurprisingly, the Fed raised its key rates by 50 basis points on Wednesday, but it was above all the ‘hawkish’ (restrictive) declarations of its chairman, Jerome Powell, which dampened hopes of an easing of interest rates this year. next.
“The Fed will continue to tighten its monetary policy because its current measures are not restrictive enough to bring inflation back below its 2% target,” explains Eugenio Aleman, chief economist at Raymond James.
‘That means maintaining high interest rates for an extended period of time,’ he adds.
With the continuation of the Fed’s aggressive tightening – the fastest in 40 years with seven hikes in a row for a total increase of 4.25 percentage points – stock prices are adjusting accordingly.
Added to the lack of support from the Fed are now fears surrounding the health of the economy, with investors fearing that the central bank will not hesitate to tip the United States into recession in order to curb inflation. galloping.
In this state of mind, investors will be particularly attentive to the publication, in the early morning, of the S&P Global PMI index for the month of December, which should show that the slowdown has continued in the private sector this this month.
In the bond market, the Federal Reserve’s decision to continue raising rates is supporting bond yields, with the benchmark 10-year bond rate hitting nearly 3.52%.
Carried away by the fall on Wall Street, oil prices continued to consolidate, with American light crude (West Texas Intermediate, WTI) losing 2.6% to nearly 74 dollars on the NYMEX.
Up 0.4% to 1,795.2 dollars an ounce, gold, the safe haven par excellence, is benefiting from the tumble on Wall Street and the fall of the dollar, which fell around 1.0630 against the euro.
Finally, note that the CBOE’s VIX volatility index – often referred to as the barometer of fear – is still stretched by 2.5% this morning, to 23.4 points.
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