European and US stocks mostly fell on Friday as investors focused firmly on central bank interest rate hikes as the US dollar rallied.
After falling in the first half of 2022 on concerns over central bank tightening, stocks have improved since late June as investors bet on a Federal Reserve pivot in the near future, the lender said. AFP.
But there is considerable uncertainty about when such a shift will occur, as Fed officials have consistently repeated the message that they are not done with rate hikes as they struggle to stifle the burning inflation.
“Equities will most likely struggle to orient themselves for the rest of the summer as Wall Street remains uncertain about how aggressive the Fed will be in September,” said trading platform analyst Edward Moya. OANDA.
In Europe, London’s premier FTSE-100 index barely managed to stay in the green, but Paris and Frankfurt fell around 1%.
All three major Wall Street indexes closed lower, with the tech-heavy Nasdaq Composite dropping 2%.
Losses in New York led to the S&P 500’s first weekly decline after four consecutive weeks of gains.
Briefing.com analyst Patrick O’Hare said the recent rally was driven by the market “convinced that the Fed won’t have to get too tight with monetary policy before finally moving into an easing stance. “.
The gains came amid a number of issues that caused unease on trading floors, including Sino-US tensions, the war in Ukraine, supply chain issues and extreme weather conditions in a large part of the northern hemisphere.
Data this week showing that UK inflation had climbed into the double digits, as well as German producer price inflation hitting 37% due to rising energy costs, also dampened hopes for a shift in monetary policy away from aggressive tightening.
“It just reminds people that central bank policies still have to be hawkish,” said LBBW’s Karl Haeling. “It was really the inflation data from the UK and Germany that really gave everything a bearish push.”
The dollar meanwhile rose sharply against its main rivals, while oil prices stabilized as traders weighed the risk of a possible global recession.
Gas prices in Europe hit a new record close as war in Ukraine affects supplies.
Elsewhere, bitcoin fell around 9% as investors avoided risky assets.
– Jackson Hole then –
The minutes from the Fed’s last policy meeting made it clear that more rate hikes are in the cards.
All eyes are now on next week’s central bank symposium in Jackson Hole, Wyoming, with Federal Reserve Chairman Jerome Powell the star attraction. He is due to speak on August 26.
In Jackson Hole, “one of the key things that people are watching is how much of Powell’s sort of repeats the message presented in the minutes,” Haeling said.
“Are they emphasizing warmongering rather than the need to slow down?”
– Key figures around 2030 GMT –
New York – Dow Jones: DOWN 0.9% to 33,706.74 points (closing)
New York – S&P 500: 1.3% down to 4,228.48 (close)
New York – Nasdaq: DOWN 2.0% to 12,705.22 (close)
EURO STOXX 50: DOWN 1.3% to 3,730.32 (closing)
London – FTSE 100: UP 0.1% to 7,550.37 (close)
Frankfurt – DAX: DOWN 1.1% to 13,544.52 (closing)
Paris – CAC 40: DOWN 0.9% to 6,495.83 (closing)
Tokyo – Nikkei 225: APARTMENT at 28,930.33 (closing)
Hong Kong – Hang Seng Index: UP 0.1% to 19,773.03 (close)
Shanghai – Composite: DOWN 0.6% to 3,3258.08 (close)
Euro/dollar: DOWN to $1.0034 from $1.0095 on Thursday
Pound/dollar: DOWN to $1.1827 vs. $1.1937
Euro/pound: UP at 84.81 pence against 84.56 pence
Dollar/yen: UP to 136.93 yen from 135.88 yen
West Texas Intermediate: UP 0.3% to $90.77 a barrel
North Sea Brent Crude: UP 0.1% to $96.72 a barrel