New York (awp/afp) – Western stock markets continued to struggle with a lot of conflicting news on Monday, from Ukraine to new US Federal Reserve (Fed) policy, as oil prices fell sharply.
European markets, shaken by the war in Ukraine for nearly twenty days, ended the session up sharply, from Frankfurt (+ 2.21%) to London (+ 0.53%), via Paris (+1.75%) and Milan (+1.67%). Zurich, the SMI gained 1.59%.
After an opening in the green, Wall Street ended in loss: the Dow Jones stagnated, the S&P 500 dropped 0.74% and the Nasdaq plunged 2.04%, again registering the index with strong technological dominance in bear market territory, 20% below its recent high.
The sector is weighed down by the fall of nearly 5% of the Hong Kong Stock Exchange, the financial center of Chinese flagship technology stocks. After the announcement of the containment of Shenzhen, the technological center of the country, it returned to its lowest since mid-2016.
Technology stocks are also generally more affected by rising bond market rates. However, rates on ten-year Treasury bills climbed to 2.13%, their highest since July 2019, on the eve of the start of the meeting of the American Federal Reserve.
A new session of talks between Russian and Ukrainian officials began on Monday and should continue on Tuesday, even if the conflict has spread in recent days to western Ukraine, at the gates of NATO member countries.
“While there has been no de-escalation in Ukraine, there is hope that talks between the two sides could lead to a ceasefire. It may be premature or even wrong,” nuanced Craig Erlam, Oanda analyst.
Oil pullback and the Fed in sight ___
Negotiations and concern over the resurgence of the epidemic in China have driven oil prices down sharply.
The barrel of Brent from the North Sea for delivery in May closed sharply down 5.12%, at 106.90 dollars, while the American West Texas Intermediate (WTI), with maturity in April, fell by 5.78% to end at 103.01 dollars.
In the wake of oil, shares in the energy sector lost ground, such as Exxon Mobil (-3.58%) or Chevron (-2.45%).
In this uncertain context, the US Federal Reserve is holding its monetary policy committee meeting on Tuesday and Wednesday. An increase in key rates of 0.25 percentage point is expected in order to fight inflation, even if the consequences of the war in Ukraine encourage the institution to be more cautious.
Apple supplier Foxconn suspends operations in Shenzhen ___
Taiwanese electronics giant Foxconn, Apple’s main supplier (-2.66%), announced that it was suspending its activities in the Chinese technology center of Shenzhen, confined by the government.
The entire semiconductor sector suffered, such as Nvidia (-3.48%), AMD (-2.04%) on Wall Street or STMicroelectronics (-1.09%), one of the few values in decline in Paris.
Volkswagen drives the auto sector ___
The German car giant Volkswagen (+4.38%) announced a sharp rise in 2021 results on Friday evening, defying the drop in sales due to the shortage of chips, and expects stable profitability in 2022 subject to of the uncertain economic impact of the war in Ukraine. Its Porsche subsidiary also climbed nearly 5%.
BMW gained 2.78% and tire maker Continental 2.64%. Elsewhere in Europe, Stellantis took 3.90%.
Bank stocks benefit from rising interest rates ___
The rise in rates on the bond market before the Fed meeting benefited banking stocks in all European markets, such as Barclays (+5.52%), Deutsche Bank (+7.98%) BNP Paribas (+4.04 %) or BMPS (+6.78%).
On Wall Street, Visa gained 1.84% and American Express 2.91%.
On the euro and bitcoin side ___
Around 7:30 p.m. GMT, the euro was trading at $1.0955, up 0.39% from Friday’s close.
Bitcoin was stable (-0.05%) at $38,707.
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