(New York) The prospect of tighter policy from the U.S. central bank sent rates higher, the dollar higher and equities lower on Friday, with Western stock markets snapping a string of weekly gains.
Updated yesterday at 5:53 p.m.
Wall Street ended at half mast: the Dow Jones fell 0.86%, the S&P 500 1.29% and the NASDAQ, tech-dominated and more sensitive to rate movements, fell 2.01%.
Over the week, the three indices dropped 0.16%, 1.21% and 2.62% respectively for the NASDAQ.
In Europe, Paris lost 0.94%, Frankfurt 1.12% and Milan 1.96%. London remained in the green, climbing 0.11%, helped by the weakness of the pound.
Over the whole week, Paris, Frankfurt and Milan are also in the red. This interrupts a series of three consecutive increases for the German and Italian places, and even six weeks for the French rating.
On the bond market, sovereign yields continued to rise. The rate for the 10-year US bond, which refers, approached 3% (2.97%) around 8:30 p.m. GMT, while it had closed at 2.79% on Monday. Over the same period, the German rate for the same maturity fell from 0.89% to 1.23%.
Bond yields “are climbing around the world and this is affecting equities,” Peter Cardillo of Spartan Capital Securities told AFP.
Market participants held out hope that slowing US inflation in July and a series of indicators showing slowing growth prompted the US central bank to pivot to looser monetary policy. But several statements by officials of the institution have called into question this perspective.
Especially since inflation may hold surprises and continue to rise sharply, as producer prices showed in Germany on Friday, with a 37.2% increase in July over one year, a new record.
“This does not bode well for consumer prices,” predicts Konstantin Oldenburger of CMC Markets.
The possibility of further sharp increases in key interest rates drove bond yields higher, but also strengthened the dollar. The greenback returned close to parity with the euro, at 1.0042 dollars for one euro around 6:40 p.m. GMT. The pound lost around 1%.
The dollar index, which compares the greenback to a basket of other major currencies, was near its multi-decade high reached on July 14.
Next week is the annual high mass of Central Banks at the Jackson Hole symposium (United States) where Fed Chairman Jerome Powell is due to speak on Friday.
New horror session for Cineworld
The British cinema chain Cineworld fell by almost 60% on Friday on the London Stock Exchange after information from the wall street journal ensuring that the company “is preparing to file for bankruptcy in the coming weeks”. The valuation has melted by 80% in one week.
Cryptocurrencies are slipping
Another sign of the risk aversion that dominates Friday, the cryptocurrency market was slipping. The main one, bitcoin, lost 9.39% to $21,231 around 6:40 p.m. GMT.
Rivian and GM
Electric vehicle maker Rivian slumped 4.04% to $34.45 after announcing it was ceasing production of its cheapest version of its electric pickup truck.
General Motors, on the other hand, was sought (+2.53% to 39.70 dollars) while the automaker wants to redistribute a dividend and resume a share buyback program was well received.
On the oil and gas side
Oil prices continued their rebound that began on Wednesday.
The price of a barrel of Brent North Sea crude for October delivery climbed 0.13% to close at $96.72.
The barrel of American West Texas Intermediate (WTI), for delivery in September, gained 0.29%, to 9077 dollars.
The European gas price continued its inexorable rise. The Dutch TTF, the benchmark for natural gas in Europe, closed up 1.49% at 247.6 euros per megawatt hour after once again approaching 250 euros.