July 22, 2024

U.S. stocks return late in trading; The oil falls off after a positive week

4 min read
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The session marked a turning point in the finals for the US markets, following a Monday (24) that led to widespread losses in international markets. On Wall Street, the Dow Jones was up 0.30% at 34,366 points, the S&P500 was up 0.29% at 4,410 points and the Nasdaq was up 0.63% at 13,855 points.

Intraday declines were significant, with the Dow Jones down 3.25% and the Nasdaq down 4.9%.

Rising geopolitical tensions erupted throughout the day with much anticipation of the Federal Reserve’s monetary policy decision next Wednesday (26), but with speculation that the move could be exaggerated. Already after a negative week, the worst since March 2020.

Already at this session, NATO’s talk of preparing Eastern Europe with more ships and warplanes to reinforce its forces in response to Russia’s increasing military presence on its borders with Ukraine was echoed throughout the day.

“Investors are worried about the possibility of a war in Eastern Europe because the human and economic costs will be huge. Some Central European economies, such as Germany, rely heavily on energy from Russia, and if a war breaks out, this power could be cut off, which could harm economic production in the EU.” Said David. Reuters Madden, market analyst at Equity Capital.

Meanwhile, the Pentagon on Monday afternoon announced that the United States was on high alert with up to 8,500 troops in Eastern Europe, with the possibility of a short-term announcement if NATO’s coalition activates a rapid response force.

The defense order was issued by US Secretary of Defense Lloyd Austin under the guidance of President Joe Biden, and the final decision on the deployment of the military has not yet been made, according to Pentagon spokesman John Kirby.

In the case of the central bank, concerns that the central bank may tighten monetary policy too quickly have heightened investor anxiety.

Goldman Sachs economists warn that the US Federal Reserve is in danger of tightening more aggressively than previously expected. The panel, led by Jan Hatzius, said in a report distributed to consumers over the weekend that the current expected situation is that interest rates will rise in March, June, September and December, and that the Federal Reserve will announce the start of the balance sheet cut in July. .

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However, inflationary pressures “risks are somewhat upwards,” the report said.

Wall Street Bank economists fear the Omigron variant supply-demand imbalances will continue and are concerned about the lingering power of wage increases. The film suggests the possibility of persistent inflationary pressures in the face of persistent disruptions in supply chains, higher wage growth and a sharp rise in rents and short-term inflation expectations.

“We see the Federal Open Market Committee taking drastic action at every meeting until the picture changes,” Goldman Sachs economists said. “This creates the possibility of an interest rate hike or a balance sheet announcement, in May, of more than four rate hikes this year.”

Marco Kolonovic, JPMorgan’s leading stock strategist, said in a note on Monday that stock markets are selling well.

“The recent downturn in risk assets seems overwhelming, and the rough indication of technical indicators and sentiments approaching the high-selling territory suggests that this may be the final stage of the revision,” Kolonovic said. “While the market is struggling to digest the turmoil imposed on it by rising rates, we expect the earnings season to remain calm,” he estimates.

Earlier, Europe’s core stock index fell nearly 4%. The Pan-European STOXX 600 .STOXX index fell 3.8%, indicating its worst daily performance since June 2020.

In London, the FTSE was down 2.63% at 7,297.15 points. In Frankfurt, the DAX index was down 3.80% to 15,011.13 points. In Paris, the CAC-40 index lost 3.97% to 6,787.79 points. In Milan, the Ftse / Mib index was down 4.02% at 25,972.90. In Madrid, the Ipex-35 index was down 3.18% at 8,417.80 points.

The session was favorable for oil prices after a week of hike. The strong dollar and the expectation of higher interest rates by the central bank shook commodity prices. Brent fell 1.84% to $ 86.27 a barrel for March; WTI was down 2.15% at $ 83.31 for the month.

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It should be noted, however, that both definitions rose for the fifth week in a row last week, increasing by about 2% since October 2014 to reach their peak.

Oil prices have risen more than 10% this year due to concerns over supply shortages and OPEC + Fight Achieve a monthly production increase of 400 thousand barrels per day. Tensions in Ukraine have been rising for months after Russia mobilized troops near its borders, sparking fears of supply disruptions in Eastern Europe.

(Com Reuters e Bloomberg)

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