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US equities fell to their lowest level in nearly a month on Friday as Treasuries rose as investors grappled with signs of slowed global economic growth and its implications for monetary policy.
The S&P 500 index fell about 0.9 percent on Friday during afternoon trading, the lowest point in four weeks, and has lost about 2 percent so far in September.
The tech-focused Nasdaq Composite fell 1.1 percent as both indices approached a second consecutive weekly decline.
In Europe, the Stoxx 600 equity meter dropped 0.9 percent and ended the week with 1 percent.
The yield on the 10-year US Treasury letter added 0.03 percentage points to 1,368 percent ahead of the Federal Reserve meeting next week, after which it is expected to provide clues as to when it will reduce its $ 120 billion-a-month debt in times of crisis. . purchases.
“Markets lack direction because we expect a turning point for the Fed to act, but the question is when,” said Juliette Cohen, strategist at CPR Asset Management.
The bond-buying program, launched in March last year, increased the prices of treasury bonds and lowered their revenue yields, increasing the relative attractiveness of equities.
Some household surges, annual consumer price inflation of more than 5 percent and wage increases have resulted in some members of the Fed’s Monetary Policy Committee call for the mortgage purchases must be reduced.
But analysts do not widely expect the cuts to begin by the end of this year.
‘We are seeing a decline [of bond purchases] as a process of six to eight months starting in December and then for [interest] interest rates to rise next year, ”said Christopher Jeffery, head of rates and inflation strategy at Legal & General Investment Management.
In Europe, the Stoxx 600 index spent most of Friday in black before falling to reflect the cautious mood on Wall Street.
The People’s Bank of China on Friday poured an extra $ 14 billion in short-term funds into the country’s banking system, the largest since February. Analysts see this as a move to ease lending conditions following a debt crisis at major home builder Evergrande and a slowdown in retail sales, industrial production and the real estate market.
The struggling real estate developer’s shares fell 3.4 percent in Hong Kong on Friday for a weekly drop of 29.8 percent.
European travel shares rose all Friday as British media reports suggested the government would ease the restrictions and quarantine rules in time for the school holidays. At the closing bell in London, the shares in British Airways owner IAG were almost 5 percent higher and the package holiday provider Tui by 6%.
On debt markets, yields on the 10-year Bund of Germany, which is reversing its price and reflecting interest rate expectations in the eurozone, rose 0.2 points to minus 0.28 percent. Italy’s equivalent yield rose 0.03 points to 0.721 percent.
Thursday, the Financial Times revealed unpublished inflation forecasts by the European Central Bank which has suggested that it is on course to raise interest rates in the eurozone in just over two years. “The conclusion by the FT that the interest rate hike could come as early as 2023 is not in line with our progress,” the bank said.
Brent crude, the oil benchmark, fell 1% to $ 74.90 a barrel. The dollar rose 0.3%.
Unhedged – Markets, finance and strong opinion
Robert Armstrong analyzes key market trends and discusses how Wall Street’s best minds react to them. Sign in here to send the newsletter directly to your inbox every weekday