Posted Sep 29, 2022, 5:05 PMUpdated on Sep 29, 2022 at 5:48 PM
Investors shed risky assets on Thursday, causing the stock markets to fall, bond rates to rise and cancel out the respite observed the day before with the direct intervention of the Bank of England (BoE) in the bond market.
Wall Street opened lower, failing to maintain momentum from the previous day. Around 2:20 p.m. GMT (4:20 p.m. in Paris), the Dow Jones lost 1.90%, the S&P 500 2.40% and the Nasdaq 3.09%. European indices also retreated. The Paris Stock Exchange ended down 1.53% at 5,676.87 points, its lowest of the year. London lost 1.77%, Frankfurt 1.71% and Milan 2.40%.
On the bond market, yields returned to levels not seen for at least ten years. The ten-year German rate, which is a reference in Europe, rose to 2.34%, against 2.11% the previous evening. The yields of the others followed the same trend, including that of the ten-year American debt (3.81%) or British (4.11%).
High inflation
The specter of recession is keeping investors alert. The US Commerce Department confirmed that US GDP contracted by 0.6% in the second quarter of 2022, but the White House said on Wednesday that the world’s leading power remained “resilient in the face of global challenges”.
In Germany, inflation jumped in September to 10.0% year on year, the highest value recorded since December 1951, due to soaring energy prices, according to provisional figures.
German Chancellor Olaf Scholz announced on Thursday the release of 200 billion euros to precisely cap energy prices that weigh on households and businesses.
Loss of trustworthy
In addition to a very complicated economic context between rising rates, high inflation and risk of recession, “investors seem to be losing more and more confidence in the ability of central banks to control the situation”, comments Pierre Veyret, analyst for ActivTrades. .
Western stock markets had benefited Wednesday from an initiative of the BoE on the bond market which had allowed a lull in the yields of government bonds and a decline in the dollar.
Around 10:35 a.m. GMT (12:35 p.m. in Paris), the pound took 0.65% to 1.0957 dollars, after falling a little earlier to 1.0763 dollars against an American currency which appreciated overall. The euro was stable at $1.9730.
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SourceAFP
