Retail stores in Wall Street and Europe declined sharply as fears of rising interest rates and inflation prompted a recession and simple monetary policy that has stabilized prices for months.
The S&P 500 blue stock index fell nearly 1.7% while the Nasdaq Composite technical index fell by 2.5%. The European index of the Stoxx 600 fell 1.9 percent.
Yields recorded for 10 years in the US Treasury, which act as fines for lending to companies and families around the world, increased 0.05% to 1.539%, an unprecedented rate since June.
Government yields, which are pushing against prices, have risen last week following rising interest rates expected by US and UK central banks, which have shown signs of stepping down from the epidemic. continuous inflation.
The 10-year Treasury yield, which traded at about 1.3% last week, is a barometer used by investors to measure the profitability of future corporations, investments and shares.
“When companies go up in business, they make money look good, especially when their income is low, such as technology,” said Rebecca Chesworth, chief education officer at State Street Global Advisors’ SPDR ETF.
Last week, the Federal Reserve said it could move forward easily and a reduction of $ 120bn-month per month to buy bonds. The world’s largest bank has also revealed that half of all investors expect the first interest rate after the epidemic to increase by 2022.
“The biggest issue in the market is one of moving,” said Samy Chaar, chief financial officer at Swiss bank Lombard Odier, referring to rising inflation and slower economic growth due to rising energy prices and “growing concerns coming from China.” ”
A day later, the Bank of England warned that inflation in the UK could exceed 4% next year, which led to the expected increase in interest rates from a record low.
The UK’s 10-year domestic yield rose 0.05 percent Tuesday to break 1% for the first time since March 2020. Sterling fell nearly 1.2% against the dollar to buy $ 1.354.
Witnessing at Congress on Tuesday, Fed Chairman Jay Powell said the crisis that has been exacerbating U.S. inflation by more than five-quarters in three consecutive months was “bigger and longer than expected.”
Powell made the remarks just hours after Brent, the world’s largest oil producer, crossed $ 80 a barrel for the first time from October 2018, Driven by hurricanes that hinder US production and rising natural oil prices.
The consumer confidence statement at the US Conference Board, published Tuesday, also spanned seven months in September. The authors of this study he mentioned concerns about Delta virus infection of coronavirus drop.
Investors are still waiting to see if Beijing officials can afford a pencil debt problems in Evergrande, a major Chinese real estate agent who missed out on interest in a foreign exchange transaction last week.
Chaar added that if the high-profile central banks were aligned with the current economic growth next year, more stocks, such as those in the banking and electricity sector, could collapse.