Stock markets affected by recession fears

(Paris) Global stock markets fell on Thursday, mostly at three-month lows, the day after the US central bank tightened, the strongest since 1994, as investors feared devastating effects on the global economy.

Posted at 9:43 am
Updated at 12:40 PM.

European indices closed in the red. Frankfurt, Milan and London lost more than 3%, while Paris lost 2.39%.

The New York Stock Exchange was equally bleak. At around 11:05 a.m., the Nasdaq, with its strong tech streak, suffered particularly (-4.10%) while the Dow Jones and S&P500 lost 2.44% and 3.27%, respectively.

The day before, however, Wall Street initially greeted with relief the determination the Federal Reserve (Fed) demonstrated to fight inflation despite the less growth-encouraging message.

The monetary institution announced a 0.75 percentage point hike in key interest rates, and most of its governors are now aiming for a range of 3.25 to 3.50% by the end of the year.

“Given that inflation will certainly remain high this summer, it seems reasonable that the Fed would raise rates by 75 basis points in July, and 50 in September” before tapering back to a 25 basis point high at the start of winter, predicts Vincent Juvens, strategist In J.P. Morgan AM.

Perhaps at the expense of economic activity. Markets were down across the board, with major European markets hitting three-month lows on Thursday, notes Michael Hewson, analyst at CMC Markets.

The Swiss central bank surprised the Swiss central bank on Thursday by raising its key rate by half a point, but the Bank of England (BoE) had a “continuity advantage,” according to Florian Allen, director at Mandarine Gestion.

Unlike the Fed, it has not decided to raise interest rates more aggressively in the face of inflation, but “it will pay special attention to indicators of persistent inflationary pressures and will respond aggressively if necessary.”

After a bleak start to the session, the euro and the pound recovered slightly against the dollar, as the single currency rose 0.69% to $1.0516, while the pound rose sharply by 1.19% to $1.2331, around 10:50 am.

In the bond market, although interest rates on the debt of mostly European countries continued to rise on Thursday, the tension eased slightly compared to the beginning of the week, especially over Italian debt, after an emergency meeting of the European Central Bank on Wednesday.

The European Central Bank has instructed its teams to “accelerate” the design of a new “anti-fragmentation” instrument to combat too wide a spread in prices between the Nordic and the southern Eurozone countries.

German Finance Minister Christian Lindner said on Thursday that there was “no reason to worry about interest rate differentials in Europe”.

Tech cash in

Technology, which relies in particular on interest rates to fund its growth, has taken the hit.

In New York, Google’s parent company Alphabet lost 3.07%, Microsoft 2.88%, Apple 3.82% while Meta fell 11.95%, Hello Fresh 6.97% and Delivery Hero 9.24%.

In Paris, STMicroelectronics lost 6.19% and Dassault Systèmes lost 2.50%. Deliveroo is down 6.19% in London.

Energy values ​​suffer

Shares of the energy sector fell after further cuts in gas supplies from Russia’s giant Gazprom, whose chief said on Thursday the company would apply its own rules to its products.

In Frankfurt, Uniper lost 9.73% and Siemens Energy lost 3%. In Paris, Engie’s stock fell 7.29% after noticing a “reduction in deliveries”, even if it had no “supply effect” for customers.

Eni, which announced that Gazprom will deliver only 65% ​​of the volumes ordered on Thursday, also fell 4.89% in Milan while Enel lost 2.81%.

On the side, oil and bitcoin

The price of a barrel of Brent crude from the North Sea decreased by 0.14% to $118.29, and the price of a barrel of US West Texas Intermediate crude rose slightly by 0.19% to $115.59 around 11 am.

Bitcoin fell 3.20% to $20,950.

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