(New York) The always aggressive speeches of the central bankers, in particular that of the Fed Jerome Powell, severely weighed down the world stock markets on Friday, while the pound suffered from economic data from the United Kingdom.
Posted at 4:55 p.m.
Already down sharply on Thursday, Wall Street accused another week of decline, the fourth in a row for the Dow Jones. The flagship index fell 2.82%, the NASDAQ fell 2.55% and the S&P 500 lost 2.77%.
In Europe, Frankfurt lost 2.48%, Milan 2.12%, Paris 1.99% and London 1.39%. Over the week, all these indices ended slightly in the red.
Investors are rehashing comments by US central bank (Federal Reserve, Fed) Chairman Jerome Powell, who said Thursday that a Fed rate hike of half a percentage point would be “on the table when the May meeting” of the institution.
Operators are now anticipating, fearing them, three increases of such magnitude this year, with the Fed showing itself ever more determined to bring down inflation in the United States.
For her part, the President of the European Central Bank (ECB), Christine Lagarde, reiterated on Friday that there was a “high probability” that rates would be raised by the end of the year if inflation stay strong. The net debt purchase program has “a strong chance” of ending early in the third quarter, she also pointed out.
These considerations eclipse the good figures for the growth of economic activity in the euro zone. It accelerated in April in the private sector, to its highest level in seven months, despite concerns about the war in Ukraine and inflation.
“The economy is very strong, as is the labor market, but both can only withstand limited monetary tightening over a short period. We will soon see if the Fed does not go too far,” said Craig Erlam of Oanda.
Conversely, the economic health of the United Kingdom is worrying with a 1.4% drop in retail sales in March. Fears caused the pound to plunge 1.48% against the dollar, to 1.2837 dollars, a lowest in a year and a half, around 6:10 p.m. GMT.
The euro was trading at $1.0788 (-0.42%), still close to its June 2020 lows. The weakness is notably caused by the difference in monetary policy between the Fed and the ECB.
In the bond market, yields remained stable after another surge on Thursday, with statements from central bankers. Bond rates on 10-year Treasury bills held steady at 2.89% after hovering around 3% overnight.
National Securities’ Art Hogan discerned “a lot of anxiety about the aggressiveness of the Fed.” “The market is spooked by how quickly the 10-year bond yield has risen,” he said.
Kering pushes back luxury
Kering shares fell 4.32% in Paris, after the publication of the luxury group’s turnover which revealed disappointing sales for Gucci, according to investors.
The entire luxury sector fell in its wake: LVMH lost 2.11%, Burberry 2.21%, Moncler 1.88% and Richemont 2.61%.
EssilorLuxottica, which also released its results, fell 2.62%.
Gap sold out
Shares of clothing store group Gap fell nearly 18% after the group lowered its earnings forecast and changed the leadership of its struggling Old Navy brand.
In London, the discount distributor B & M lost 5.96% after the announcement of the departure within the next 12 months of its historic boss Simon Arora.
Conversely, the action of the American group of hygiene products Kimberly-Clark jumped 8.13% after raising its forecast for sales for the year.
On the side of oil and bitcoin
Oil prices ended lower, struggling to recover sustainably as Shanghai’s lockdown continues to be extended, raising fears for Chinese demand for black gold.
A barrel of Brent North Sea crude for June delivery fell 1.55% to $106.65.
The barrel of American West Texas Intermediate (WTI) for delivery the same month lost 1.65% to 102.07 dollars.
Bitcoin was down 2.88% at $39,444.