International capital markets began a significant loss this week after US inflation data in May rekindled fears that central banks would be forced to tighten interest rates sharply, CNBC reported. ZF.
The much-anticipated U.S. consumer price index, released last Friday, reached 8.6% in May 2022 compared to the same month last year, the highest level since 1981, refueling investors’ estimates that Reserve decisions The Federal Reserve (Fed) and other central banks are at risk of a recession.
In Europe, in the middle of the trading session on Monday, the major stock indices in the west of the continent fell by 1.6% to 2.2%, while the Stoxx 600, which covers 600 companies in economies such as the United Kingdom, Austria, Belgium and Norway lost 2%, according to MarketWatch data.
Dow Jones, S&P 500 and Nasdaq 100 futures lost 2%, 2.4% and 3%, respectively. In the Asia-Pacific region, Hong Kong’s Hang Seng index depreciated by 3.4%, Japan’s Nikkei 225 was down 3%, as was South Korea’s Kospi index.
At the same time, the two-year treasury rate in the United States reached its highest level in 2007 and is getting closer to a ten-year benchmark reversal, a phenomenon seen by many analysts as a sign of a recession. .
“I think the likelihood of facing a bear market and a recession has undoubtedly increased as a result of the blow we received on Friday.”says Fahad Kamal, investment director at Kleinwort Hambros.
In the same note, Richard Kelly, head of global strategy, TD Securities, argues that stock and bond markets are shaping up in the US recession in the fourth quarter of 2022 or the first quarter of 2023.
So this week is going to be crucial in terms of the fight between markets and central banks, on the one hand, and inflation, on the other. Fed officials will meet on Tuesday and Wednesday to discuss the next monetary policy decision, with estimates of a 75 basis point increase gaining more traction after last Friday’s data.
On Thursday, the Bank of England’s Monetary Policy Committee will announce its next decision to raise interest rates. Central banks in Japan, Switzerland and Brazil will also provide guidance on future monetary decisions.
The gross domestic product of the United Kingdom fell by 0.3% in April compared to the previous month, according to official data released today, failing to meet the average of analysts’ estimates of plus 0.1%.
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