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Wall Street weighed down by a Fed, the European stock markets shifted



(New York) The New York Stock Exchange ended in sharp decline on Wednesday, taken the wrong way by the firm speech of the president of the American central bank (Fed), whose initial press release had made him hope for an accommodating gesture.

After hovering between red and green for a long time, the Dow Jones ended down 1.55%, while the NASDAQ index slid 3.36% and the broader S&P 500 index fell 2.50%.

In Europe, Paris fell by 0.81%, Frankfurt by 0.61%, and London by 0.58%. Only the Milan Stock Exchange managed to stay in the green (+0.03%), but closed before the Fed’s communication, postponing their reaction to the Federal Reserve’s announcements until the next day.

Futures contracts on the CAC40 and the DAX, the flagship indices of the Paris and Frankfurt stock exchanges, were thus down sharply around 8:35 p.m. GMT.

The Fed raised, as expected, its key rate by 0.75 percentage points on Wednesday, bringing it to a range between 3.75% and 4%, the highest in nearly 15 years.

In the statement announcing the decision, the Fed’s Monetary Policy Committee said that in determining the path of rates, it would “take into account the cumulative effect of monetary tightening” already carried out on economic activity.

This mention “sent to the markets the signal that the Federal Reserve would be very cautious after the next two rate hikes”, explained Tom Cahill, of Ventura Wealth Management.

“But the press conference that followed (from Chairman Jerome Powell) reaffirmed that the Fed still has a long way to go. […] and that it was premature to talk about a pause in rate hikes, and that drove the market down,” he added.

“Inflation is proving to be a tough opponent to beat and the Fed has warned against overly optimistic expectations of a return to more accommodative monetary policy,” observed Susannah Streeter of Hargreaves Lansdown.

China Cooled Luxury

Luxury stocks, sensitive to the health lock in China, a country which represents one of their main growth drivers, tightened after the reaffirmation of the zero-COVID-19 policy by the authorities: LVMH fell by 2.17% , Richemont by 1.92% and Burberry by 1.13%.

Technology unscrews

Unsurprisingly, the prospect of higher rates for longer, reaffirmed by the Fed, froze the technology sector, which is very dependent on the cost of money to finance its growth.

Apple (-3.73%), Microsoft (3.54%), Alphabet (-3.79%), Tesla (-5.64%) and Amazon (-4.82%) all took a shine, this latest descending even to its lowest level since March 2020, in the early days of the pandemic.

The movement affected Airbnb (-13.43% to 94.41 dollars), despite the publication of a turnover and a net profit above expectations.

Commodities and Currencies

The euro fell 0.51% against the greenback, to 0.9826 dollars. The pound yielded 0.79% to 1.1393 dollars around 4:35 p.m.

Bitcoin lost 1.46% to $20,164.

Oil prices rose after the release of the level of US oil inventories fell sharply last week, and the lowest since November 2014.

A barrel of North Sea Brent crude for January delivery gained 1.59% to $96.16, while US WTI for December delivery rose 1.84% to $90.

The price of European natural gas jumped 16.95%, to 135.89 euros per megawatt hour, boosted by renewed concerns about Russia. The White House said on Wednesday it was “increasingly concerned” about the possibility of a Russian nuclear strike.

World grain prices, which had soared at the start of the week, began to fall on Wednesday after the announcement of Russia’s return to the Black Sea corridor agreement, despite doubts about the fulfillment of commitments made. by Moscow, with declines of more than 5% on the American wheat market.

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