(New York) Global markets reacted mixed to Monday’s announcement of US President Joe Biden’s reappointment of Jerome Powell as head of the US Federal Reserve, as COVID-19 fears persisted in Europe .
After initially reacting enthusiastically, the Dow Jones ended with a modest increase of 0.05%.
The extended S&P 500 index (-0.32%) and the NASDAQ (-1.26%) which had reached records in session, fell back into the red, heavily for the NASDAQ, whose technology-dominated stocks are more sensitive to interest rates.
The technology index was undermined by rising bond market rates. The yield on 30-year US Treasuries climbed to 1.62% from 1.54%.
Investors are now forecasting the Fed’s key rate hike in June 2022, much earlier than a few weeks ago, which would penalize “tech” stocks by increasing the cost of the loans they contract for their development.
Europe ended in a mixed manner, the rebound observed after Joe Biden’s announcement fizzling out late in the session amid fears of further restrictions. London gained 0.44%, driven by its mining stocks, Milan 0.17% but Paris lost 0.10% and Frankfurt 0.27%.
Jerome Powell has received the assent of Joe Biden to remain four more years at the head of the powerful American central bank. His appointment must now be confirmed in the Senate.
After 18 months of massive intervention, the Fed began to reduce its support to the markets in mid-November, and its next challenge will be to control inflation, which is currently rampant, while affecting the economic recovery as little as possible.
“The markets are therefore seeing Jerome Powell adopt a slightly more aggressive stance vis-à-vis the withdrawal of monetary support measures and finally act on rates to control inflation during the first half of next year,” he said. estimated Christopher Vecchio, analyst for the specialist site DailyFX.
A perilous exercise, especially since the COVID-19 crisis is not yet over. Several European countries are taking restrictive measures in the face of the increase in contamination, up to containment for Austria.
In Germany, outgoing Chancellor Angela Merkel warned that the current restrictions were “no longer sufficient” in the face of the “dramatic situation” caused by the surge in infections, according to sources within her party.
In addition, inflation could climb even more than expected this fall, to nearly 6% year on year in November, warned the Federal Bank of Germany.
In addition, the Santiago Stock Exchange jumped 8.47% the day after the first round of the presidential election in Chile, where the far-right candidate for the ultra-liberal economic program, José Antonio Kast, came out on top.
Telecoms electrified by TIM
The American fund KKR has expressed an interest in buying the Italian operator Telecom Italia (TIM), for nearly 11 billion euros.
KKR is offering 0.505 euro per share, which is a premium of more than 40% over Friday’s closing price before the announcement, which caused TIM to jump 30.25% to 0.45 euro on Monday.
Vivendi, TIM’s main shareholder, took 2.53% to 11.33 euros, while the entire telecoms sector was pulled in the wake of the announcement.
In Frankfurt, Deutsche Telekom won 2.60% to 16.91 euros. In London, Vodafone climbed 3.19% to 117.24 pence and BT 2.52% to 164.70 pence.
Neil Wilson, Markets.com analyst, recalls that “there has been a lot of speculation about a possible BT takeover lately and KKR’s move reinforces the idea that Altice could launch an offer.”
On the oil, euro and bitcoin side
Oil prices rebounded a bit on Monday after a week of steep decline as the strength of COVID-19 in Europe hovers over demand for black gold
A barrel of Brent from the North Sea for delivery in January ended in London, up 1.02% to 79.70 dollars. In New York, a barrel of West Texas Intermediate (WTI) for the same month, of which it was the first day of use, gained 1.06%, to finish at 76.75 dollars.
At 8:10 p.m. GMT, the dollar was climbing 0.50% to a 17-month high at $ 1.1233 per euro, with the greenback galvanized by the prospect of a faster rate hike.
Bitcoin lost 5.69% to $ 56,150.