The technical fuel drop in the global equity market hits Europe and Asia

Stock markets in Europe and Asia fell after a slide on Wall Street, with technology stocks taking a new push from concerns that rising inflation would prompt central banks to tighten monetary policy.

Markets in Germany and France fell by a similar margin, while Europe’s Stocks 600 index fell 1.7 percent in morning trading. London’s FTSE 100 fell 2 percent. The fall came after the US technology-heavy Nasdaq composite fell 2.6 percent on Monday

Shares of Technology were the biggest seller in Europe on Tuesday, with the Stoxx 600 tech index down 2 percent. According to referential data, all other large industrial groups were also less that day.

The move comes ahead of US inflation data on Wednesday, which showed consumer prices in April were 3 per cent higher than the same period last year. 3. percent and is expected to increase by 0.2 percent compared to March 2021. A “core” indicator that does not exclude volatile food and fuel prices are forecast to rise 0.0 percent over the previous month. Citigroup economists expect used cars, transport and hotel prices to boost key indices

Data obtained on Tuesday showed that the price of Chinese factory gates, an indicator of what domestic consumers and Western importers should pay for goods, reached a three-year high last month, a year at 7.6 percent.

Hong Kong’s Hang Seng fell more than 2 percent and Japan’s Nikkei 225 Tokyo trade session fell more than 3 percent.

The chairman of the US Federal Reserve is Jay Powell Committed To continue the central bank’s monthly ব 120 billion monthly bond purchases that have pushed the market through the epidemic until the recovery path is clear.

Investors, however, are waiting to see when the Fed may be forced to change its position, predicting a challenge after the central bank. overhaised Its inflation last year to taste strong short-term price increases.

“We expect a rapid economic recovery this year, and as a result of inflationary pressures, investors will need to further tighten their position on tightening monetary policy,” analysts at Capital Economics commented in a research note.

Inflation does not only increase the likelihood of central banks withdrawing support for the market. It also lowers returns on fixed-income securities, such as government bonds, which lowers their prices and increases yields. The yield on U.S. Treasury bonds informs investors how to value future cash flows from equities. Analysts say this is a particularly important issue for tech stocks, which have grown rapidly during the epidemic and have been flattened at low prices.

Shares of many Wall Street high flyers are starting to bounce back quickly. The price of the Kathy Woods Orc fund, which holds shares in companies like Tesla, is almost falling Third Since its February peak, other volatile parts of the market, such as non-profit technology companies and groups, have stumbled upon Bitcoin price fluctuations.

The yield on the 10-year U.S. Treasury was flat at 1.608 percent on Tuesday, but rose to about 0.9 percent at the start of the year.

While not all analysts are concerned about the future direction of equities, some say high inflation in the U.S. will prove to be transient as consumer demand stabilizes and supply chain barriers related to the industry shutdown were resolved last year.

“Although investors have been concerned about inflation lately, we expect that any near-term spying on inflation will be temporary and not worrying about uninterrupted inflation,” said Andrea Bevis, senior vice president of personal wealth management at UBS.

He added, “Investors need to diversify beyond mega-cap technology firms and move into market compounding and value-based regions”, such as energy producers and industrial groups, “which must continue from high yields and expansion? Economic recovery”.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *