Stock and debt markets started the week with heavy losses after the weekend break. With the gas supply cut off, Moscow continues to threaten, economic activity continues to show signs of having cooled down and central banks are preparing to continue raising rates with inflation spreading in the shopping basket. This Monday the main European markets closed in the red and the euro continued to lose against the dollar, reaching its lowest level in 20 years. In the case of the Ibex 35, the decline moderated to 0.88% after starting the day with a 2% drop. The Spanish selective already accumulates 13 in the last 14 days with this drop.
The world economy throws signs of deterioration from almost all corners of the world, starting the course of the market with pessimism. The epicenter of the current crisis is Russia, which continues its attacks on Ukraine. But the global economy also suffers from the confinements due to Beijing’s covid-zero policy, which continues to make it difficult to end global bottlenecks, or the drought that Europe continues to suffer. The markets, however, have been frightened by the new closure of Gazprom for maintenance work, according to the gas company. That has sent gas prices skyrocketing again by 30%.
Says Gilles Moëc, Chief Economist at AXA Investment Managers “The deterioration in the data is evident, but without any clear indication that underlying inflationary pressure is easing”. The markets are pending the meeting of this Wednesday in Frankfurt of the ECB. They take a rise in interest rates for granted. The question is the magnitude of that increase. Analysts believe that this time the hawks will ask to make money more expensive by 0.75%. According to the minutes of the July meeting, there was no unanimity in the 0.5% increase, since some governors asked for greater gradualness. And on this occasion, the most lax wing has barely raised its voice. The chief economist of the ECB, Philip Lane, barely advocated last week in Barcelona for step by step, without abrupt increases.
The positive data comes from The US continues to create jobs, despite the rise in interest rates, reaching all-time highs. And despite being a positive figure in the labor markets, the strength of the US labor market does nothing but point to new rate hikes in the Federal Reserve, which has made the fight without quarter against the increase in prices a priority.
Given this perspective, and especially with the new threats on the supply of gas, the euro has fallen again against the dollar. With the EU countries launching new measures to alleviate the cost of energy (such as Germany) or help energy companies (Sweden and Finland), the European currency has lost parity again and has even gone further by touching 0 .9876 first thing in the morning. This is the lowest level in two decades. The sovereign debt also scales: the German 10-year bond reaches 1,579%, but this Monday the peripheral debt rises above all. The Italian rose this Monday to 3,972%; the Spanish, at 2,792%, and the Portuguese, at 2,677%.
In the stock markets, the Eurostoxx has collapsed 1.53%, reflecting the red numbers throughout the continent. The hardest hit was the German DAX, which fell 2.22%, followed by the French CAC, which fell 1.2%. The Ibex has fallen by 0.88%. The losses have been fattened above all by industrial stocks, which are the ones that are suffering the most from the rise in energy prices. Posted by Iraic.info, a news and information agency.