(Paris) Stock markets were preparing for a tightening of monetary policy in the United States on Tuesday following the reappointment of Federal Reserve Chairman Jerome Powell, which further strengthened the dollar against other world currencies.
The European stock markets evolved sharply in the first exchanges, from London (-0.59%) to Milan (-1.51%) via Paris (-1.39%) and Frankfurt (-1.37%) around 3:50 a.m.
Asia ended mixed, with a decline in Hong Kong (-1.20%) and Shenzen (-0.22%), while Shanghai (+ 0.20%) rose slightly. The Tokyo Stock Exchange remained closed to observe a public holiday in Japan.
On Monday, if the Dow Jones index ended three sessions of decline, with a small gain of 0.05%, the S&P 500 lost 0.32% and the technology-colored NASDAQ, 1.26%, all three having nevertheless evolved in clear increase in the first exchanges.
This reversal of the indices came with the sharp tension on the interest rates of the bond market which followed the announcement of the confirmation of Mr. Powell at the head of the American Federal Reserve (Fed).
“The Fed has no alternative as to the direction it will take in the coming months: the rise in inflation will not moderate in an environment of zero interest rates and accommodating monetary policy,” describes Ipek Ozkardeskaya , Swissquote analyst.
Another consequence of its anticipations of more restrictive monetary policies, the dollar evolved to highs of against other currencies: the dollar index, which compares the greenback to a basket of currencies, moved to 96,577 points around 4 a.m. more level seen for over a year.
It exceeded the 115 yen mark on Monday for the first time in more than four years after hitting a new high in a year and a half against the euro on Monday (at 1.2233 dollars against one euro).
On Tuesday, the European currency rebounded a little, to 1.1263 dollar (+ 0.23%).
In addition, “the evolution of the pandemic is back in the trading rooms as the main point of attention”, also notes Christopher Dembik, director of strategy and macroeconomics of Saxo Bank.
Thus, Germany was deeply concerned on Monday about the rise in COVID-19 contamination, which led Washington to advise Americans not to go there.
The backlog of technology
In the wake of the sharp drop in the American technology index NASDAQ on Monday, the values of this sector in Paris fell significantly: Capgemini lost 2.60% to 206 euros, STMicroelectronics 3.14% to 44.31 euros and Téléperformance 3, 03% to 348.90 euros. In Frankfurt SAP lost 1.71% to 119.62 euros.
Sensitive to rising interest rates, investors normally shy away from so-called growth stocks, such as technology, because they need low rates to generate the growth on which their stock market valuation is based.
On the oil and bitcoin side
Oil prices retreated Tuesday, with the market anticipating a possible face-to-face meeting between US President Joe Biden, who is pushing other countries to use their strategic reserves to lower oil prices, and OPEC, which threatens to reduce its production to maintain them.
A barrel of North Sea Brent for January delivery lost 0.75% to $ 79.10, 3:40 a.m. while that of WTI for the same month lost 1.15% to $ 75.87 around.
After moving higher for part of the Asian session, bitcoin fell 0.50% to $ 56,000.