(New York) The stock markets and oil fell Tuesday in the face of the advance of the Omicron variant that may hamper the economic recovery, while an unexpected statement from the boss of the Fed weighed on the New York Stock Exchange.
After a modest rebound on Monday, European markets and Wall Street are back in the red.
European indices nevertheless reduced their losses compared to the start of the session: Paris dropped 0.81%, Frankfurt 1.18%, London 0.71% and Milan 0.87%.
On Wall Street, the main indices plunged, shaken by the firm remarks of the boss of the American Central Bank (Fed) on inflation and monetary policy.
The Dow Jones index lost 1.86%. The tech-heavy NASDAQ dropped 1.55% and the S&P 500 dropped 1.90%.
In a speech before a Senate committee, Federal Reserve Chairman Jerome Powell ruled that now is the time to stop talking about temporary inflation in the United States.
An “unexpected turnaround”, according to Michael Hewson, analyst at CMC Markets UK, given that Jerome Powell hammered for months that the rise in prices should not last and that it was due to transient factors linked to the recovery.
Powell changes his tone on inflation
The Fed boss said that “the risks of more persistent inflation have increased”, and that he is considering a faster reduction in asset purchases in order to fight against rising prices.
“Inflationary pressures are high and it is therefore appropriate to consider concluding a few months earlier the reduction of our asset purchases,” he said again, a remark which has plunged the indices because it is synonymous the prospect of an earlier-than-expected hike in interest rates.
Inflation in the United States is at its highest for 31 years and that in the euro zone reached a record level in November, at 4.9% over one year, unheard of for more than 20 years.
“Markets, which were already nervous over Omicron fears, were shocked by Jerome Powell’s comments that the Fed plans to speed up the timeline for reducing its asset purchases in order to better combat the inflation, ”commented Cliff Hodge, chief investment officer at Cornerstone Wealth.
On the virus front, more and more countries say they have detected the new strain among tests carried out on their soil, and the implementation of new health restrictions is increasing around the world.
In addition, statements about the weaker efficacy of current vaccines against the Omicron variant and the potential risks to the economy have fueled investor fears.
“The unpredictability of the pandemic and the political uncertainties that directly follow it represent a great burden” for the markets, comments Andreas Lipkow of Comdirect.
After a jump provoked by Mr. Powell’s remarks, the interest rate on the ten-year American debt returned to a low level, 1.45% against 1.53% at the close of the day before, a sign of the investor risk aversion.
Inditex down after Marta Ortega’s appointment
The action of the clothing group dropped 6.10% to 27.86 euros in Madrid after the appointment of Marta Ortega, daughter of Spanish multibillionaire Amancio Ortega, at the head of the group that owns the Zara brand.
Optimistic Volvo Cars
Swedish automaker Volvo Cars suffered from the effect of semiconductor supply shortages in the third quarter, but says the situation improved at the start of the fourth quarter. In Stockholm, the stock jumped 13.61% to 77.82 SEK.
Oil slumps, dollar and bitcoin recovery falters
Crude prices fell sharply, weighed down by fears related to the new coronavirus variant, in a nervous market two days before the OPEC + summit.
In New York, a barrel of West Texas Intermediate (WTI) for January delivery fell 5.38% to $ 66.18.
In London, the price of a barrel of Brent from the North Sea for the same month, of which it is the last day of quotation, lost 3.90% to 70.57 dollars.
The euro, which had fallen slightly on Monday after gaining nearly 1% against the greenback on Friday, recovered 0.42% to 1.1338 dollars.
Bitcoin lost 1.96% to $ 57,182.