(New York) Global markets fell on Tuesday after their rally last week, weakened again by fears linked to inflation and expectations of monetary tightening by central banks.
Updated yesterday at 4:59 p.m.
The European indices ended in sharp decline in Paris (-1.43%), Frankfurt (-1.29%) and Milan (-1.22%). London (+0.10%) was supported by commodities.
On Wall Street, the Dow Jones index dropped 0.67%. The NASDAQ lost 0.41% and the S&P 500 0.63% coming out of the Memorial Day holiday long weekend.
“The persistent inflation that prompted the Fed to adopt a tough monetary policy recently raises concerns about a slowdown in economic activity and the possibility of falling into a recession,” Schwab analysts summed up.
Recovered from the shock of the pandemic thanks to the support of central banks and governments, the stock markets are struggling in the face of inflation which is gaining ground since the Russian invasion of Ukraine and in the face of a slowing global recovery.
The inflation rate in the euro zone hit a new record in May, at 8.1% year on year, a situation which should increase pressure on the European Central Bank (ECB) to tighten monetary policy. the euro zone by raising its key rates.
“At these rates, inflation is a source of growing concern about the economic outlook,” commented economists from Riches Flores Research.
So far, the ECB seems intent on treading softly to bring inflation down, while its US counterpart (Fed) last week estimated that rate hikes of half a percentage point, bigger than the usual quarter-point hikes, would “undoubtedly be appropriate” in the coming months.
Consumer price inflation has reached record levels every month since November in the euro zone. In the United States, a first plateau in May was observed, according to the PCE indicator published last Friday.
As for consumer confidence, it deteriorated slightly in May in the United States, but less sharply than expected, according to the Conference Board index published on Tuesday.
This data suggests “that inflation, particularly in categories such as food and energy, is weighing on household confidence and affecting consumer budgets,” underlines Eric Lafrenière, US equity manager at Richelieu Gestion.
President Joe Biden assured that inflation is his economic priority when he met on Tuesday at the White House, on this subject, with Treasury Secretary Janet Yellen and Fed Chairman Jerome Powell.
Sensitive to inflation, the sovereign debt market was tight: the US 10-year rate climbed 10 basis points to 2.85% around 4:30 p.m.
In a sign of corporate-level tensions, UK retail chain B&M plunged 15% to 389.70 pence, after warning it expected lower results this year due to rising prices. price.
On the oil side
Before settling on profit taking at the end of the session, oil prices rose on Tuesday to levels not seen since the peaks reached in early March.
Prices were galvanized by the announcement by the European Union of a gradual embargo on Russian oil imports as part of the sanctions imposed on Moscow, after weeks of negotiations.
The price of a barrel of Brent from the North Sea for delivery in July, of which it was the last day of trading, gained 0.96%, to close at 122.84 dollars.
As for the barrel of American West Texas Intermediate (WTI), also for July, it fell by 0.34%, to 114.67 dollars.
Unilever and DSM jump
The agrifood and hygiene giant Unilever soared 9.43% after the appointment of American billionaire Nelson Peltz to its board of directors and the confirmation of the entry into the capital of its activist fund Trian.
The Swiss Firmenich wants to merge with the Dutch DSM (+8%) to create a new giant in perfumes and aromas, nutritional and health products, the two groups announced on Tuesday.
On the currency side
The euro fell 0.47% to 1.0730 dollars shortly before 5 p.m.
Bitcoin rose 1.46% to $31,711.