(New York) Markets fell on Friday on the prospect of further monetary tightening in the United States, as investors were less optimistic about corporate earnings, after a few misfires, including that of Netflix.
Updated yesterday at 5:10 p.m.
All of the European markets ended frankly in the red: Frankfurt (-1.94%), Paris (-1.75%), London (-1.20%) and Milan (-1.84%).
On Wall Street, the Dow Jones lost 1.30%, marking its sixth consecutive session of decline, while the NASDAQ, very influenced by technology stocks, lost 2.72%, the broader S&P 500 index yielding to him 1.90%.
Since its high in late November, the NASDAQ has dropped more than 15%. Over the past week, the index has dropped 5.6%, its worst performance since the start of the pandemic.
“Investors are wondering about the next Fed rate hike. It is expected for the March meeting, but the magnitude of the increase (25 or 50 basis points) is today the uncertainty factor,” according to a note from Edmond de Rotschild.
The US Federal Reserve (Fed) is meeting its monetary policy committee in the middle of next week and investors are awaiting details on its rate hike scenario.
To these fears, “we must add the caution of some investors as the first annual results begin to fall, not to mention the tensions between Russia on the one hand and Europe and the United States on the other”, believe Edmond de Rotschild’s experts.
After the results of American banks, which have been considered mixed in recent days, investors were disappointed on Friday by corporate results, Netflix in the lead.
The platform saw its portfolio grow by 2.5 million net subscribers in the first quarter, which would be its worst figure for this period of the year for twelve years.
The stock ended down 21.79% at $397.50. In two months, the stock fell more than 43%. Netflix has returned to its April 2020 valuation, at the very start of the coronavirus pandemic.
“It scared the market,” according to Baird analyst Ross Mayfield. The VIX index, which measures the volatility of the market, rose sharply, registering close to the levels known just after the discovery of the Omicron variant.
“The technology sector, which has emerged as the big winner of the health crisis, has been struggling to find its way back up for several weeks as the rise in rates seems more and more inevitable”, according to Edmond de Rotschild.
Geopolitical tensions surrounding the Ukrainian issue also contributed to fueling pressure on the markets.
The general nervousness benefited bonds, whose prices rose and yields fell (the two move in opposite directions). The benchmark rate for ten-year US government bonds eased to 1.77% from 1.83% the day before.
Oil retreats after its records
Oil prices fell, offset by rising US inventories, ending a string of strong daily gains in a market with little appetite for risky assets.
The price of a barrel of Brent from the North Sea for delivery in March lost 0.55% to 87.89 dollars.
In New York, a barrel of West Texas Intermediate (WTI) for delivery in March, which is the first day of use as a benchmark contract, lost 0.47% to 85.14 dollars.
Miners deepened their losses
In Paris, ArcelorMittal fell 7.33% to 28.84 euros. On the British market, Evraz lost 4.18% to 540.60 pence, BHP 3.16% to 2423.50 pence and Anglo American 2.70% to 3429.50 pence.
Wind power in the storm
The turbine manufacturer Siemens Energy collapsed by 16.63% to 19.13 euros, after having lowered its forecasts for the year 2022, mainly due to its subsidiary in the wind power Siemens Gamesa, which revised downwards its prospects.
The euro rises and bitcoin falls
The euro rose 0.30% to $1.1346, while bitcoin fell 11.39% to $36,963.