By John Meyer, financial consultant. Eurasia Business News, March 15, 2022
Volatility remained high on global markets on Tuesday, as Wall Street nevertheless managed to support Western stock indexes on the eve of a rate announcement by the U.S. Federal Reserve, while oil prices continued their fall.
At half-mast on Monday, Wall Street rose vigorously today : the Nasdaq technology index gained 2.92%, the broader S&P 500 index +2.14% and the Dow Jones +1.82%.
In Europe, the stock indexes ended slightly lower, making up most of their losses at the beginning of the session. Paris stock index CAC40 fell 0.23%, Frankfurt lost 0.09%, and London fell 0.25%. Milan stock index rose 0.31%. In Zurich, the SMI ended with a minimal gain of 0.03%.
European markets were notably driven in the morning by the fall in Chinese equities. The Hong Kong Stock Exchange plunged 5.72% and the Shanghai Stock Exchange 4.95%, undermined by the announcement of new lockdowns, especially in the technology capital Shenzhen.
These lockdowns in one of the main commodity-importing countries have had a brutal impact on the crude oil market.
The barrel of North Sea Brent for delivery in May closed below $100 on Tuesday for the first time since February 25.
The benchmark price for this variety of oil fell 6.53%, to end at $99.91, while the barrel of U.S. West Texas Intermediate (WTI) for delivery in April fell 6.37% to $96.44.
Lower commodity prices could reduce the strength of headwinds on the global economy including already very high inflation in the United States and Europe.
The pace of inflation is at the heart of the US Federal Reserve’s (Fed) monetary policy meeting that began on Tuesday and whose conclusions will be delivered on Wednesday at 18:00 GMT.
The US Fed should raise its key interest rate to combat inflation, the highest since January 1982. After spending two years at the very low level of 0 to 0.25% to support the economy, it should experience a first increase, probably towards a range of 0.25 to 0.50%.
Wholesale price inflation in the United States (PPI index), published on Tuesday, remained stable over one year in February at 10%, but slowed over one month to +0.8%, surprising analysts.
Facing enduring high inflation, investors are seeking hedge to protect their wealth and purchasing power. Gold prices reached today $ 1,943.70 per troy ounce and are now at $ 1,917.50 at 06:25 PM NY Time. Over the past 30 days, the price of the gold troy ounce grew by 3.09%.
After a sharp rise on Monday, interest rates on government bonds remained at a high level: 2.15% for the US 10-year bond.
Investors, however, remain very attentive to the news of war in Ukraine.
Russian and Ukrainian delegations resumed talks on Tuesday, as Russian strikes multiply on Kyiv and the Russian offensive spreads throughout the country.
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