Global stock markets fell on Friday in light of the risk of rapid and strict monetary tightening by the US central bank (Fed). The pound plunged in foreign exchange markets, worried about the British economy.
Wall Street, already under pressure from the Fed on Thursday, was expected to fall slightly by about 0.20% on Friday, according to Dow Jones and S&P 500 futures contracts. The Nasdaq’s was stable.
At around 1.20 pm, the European stock markets fell from Paris (-1.49%) to Frankfurt (-1.73%), via London (-0.81%) and Milan (-1.61%). The Swiss stock market was better able to withstand the shock, with its flagship SMI index only falling 0.28% around 1:50 PM.
Figures on the economic situation in the eurozone had temporarily delighted investors, allowing European indices to reduce their early morning losses. Eurozone economic activity growth accelerated in April in the private sector to its highest level in seven months, despite concerns over the war in Ukraine and inflation.
England on trial
In the UK, a 1.4% decline in retail sales in March, a decline that accelerated compared to February, raised concerns about the health of the economy and caused the pound to fall 0.93% against the dollar and 0.84% against the euro. The British currency thus reached a low point against the dollar in a year and a half, at $1.2862.
“Today’s numbers could play a role in the Bank of England’s monetary policy decision in May,” said CMC Markets analyst Michael Hewson, noting that “the central bank faces an unenviable choice between high inflation and low inflation.” risk created by interest rate hikes in the middle of an economy.
Fed and ECB in doubt
Monetary issues are at the heart of investor concerns after comments from Federal Reserve (Fed) Chairman Jerome Powell, who said on Thursday that a half-percentage-point Fed rate hike would be on the table at the institution’s meeting. in May.
Operators now fear three increases of such magnitude this year. “The Fed chairman re-emphasized the urgency of a rapid rate hike and frightened many investors,” said Comdirect’s Andreas Lipkow, who also points out that “the recent gains (in equities) were not driven by just a few companies “.
As for the European Central Bank (ECB), its president Christine Lagarde assured on Thursday that the exact time of the end of the net debt purchase program would depend on economic indicators. The reaction on the bond market was immediate: government bond yields in Europe and the United States rose sharply on Thursday. On Friday, short-term rates rose again and long-term rates stabilised.
Following the upheavals on Thursday, the euro has also come under pressure, falling 0.11% against the dollar to $1.0822 around 11:15 am GMT.
Kering pushes luxury back
Kering shares fell 4.14% in Paris on Friday after the release of the luxury group’s sales that investors say revealed disappointing sales for Gucci. The health situation in China in particular has had an impact. The entire luxury sector fell in the wake of Kering: LVMH lost 1.22%, Burberry 1.88%, Moncler 1.49% and Richemont 1.54%.
Swiss cement maker Holcim climbed 4.12% after reporting a sales increase of more than 20% for the first quarter, driven by acquisitions in roofing products, and raising its targets for 2022.
On the side of oil and bitcoin
Oil prices fell again on Friday and struggled to rise sustainably as the lockdown in Shanghai is extended further, raising fears over Chinese demand for black gold.
At about 1:15 p.m., a barrel of Brent from the North Sea for June delivery fell 1.27% to $106.95. That of West Texas Intermediate (WTI) US for same month delivery lost 1.45% to $102.27.
Bitcoin was stable at $40,570.
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