Volatility is mounting in a market already under pressure from the prospect of further rate hikes by central banks
Caution is returning to European equity markets and the color red dominates the main markets of the Old Continent, in a session marked by the so-called fourfold witch hour, with the expiration of futures and options on stocks and indices. An event that usually increases trading volumes and volatility in the market.
The Ibex-35 yields 1% and puts 8,000 points on the line, with only seven positive values. The banking sector, which saw strong gains on Thursday, has been the main drag in the final session of the week, as investors once again feel uncertainty about how aggressive central bank policies will affect the economic recovery.
Against this background, the market is acting on the mantra that good economic news is bad for equity markets, given the support monetary institutions need to continue raising interest rates. This is what has happened on Wall Street, with significant losses after data releases, such as the first claims for unemployment benefits or retail sales, which have positively surprised analysts.
Link Securities analysts say that “the latest macro data released in the US, including the August CPI, has pushed many investors’ expectations upwards about how far the Fed will raise its official interest rates.” Expectations now closer to 4.5% than the 4% a week ago.
This fact has caused short-term government bond yields, especially those of 2-year bonds, to rise sharply in recent days, reaching their highest level since 2007.
“In fact, it is this rebound in bond yields that has been doing the most damage to Western stocks in recent sessions, especially growth stocks, such as technology stocks, whose theoretical valuations suffer enormously as they skyrocket. Interest rates rise,” the experts insist. .
Investors are also closely monitoring the crypto market’s behavior after Etherum successfully completed its ‘merger’ (The Merge) on Thursday. The ether, the virtual currency that supports this platform, plummeted by 10% after this move that brought about the update of the network through technological improvements.
In technical terms, the change will consist of an update that transforms the platform from its computing power reward model or proof of work (Proof of Work) to another of proof of participation (Proof of Stake), as the latter is more efficient and requires less energy consumption to verify transactions on the network. Among other things because the figure of the ‘miner’ disappears.
The declines continued in its price this Friday, albeit in a much more moderate way.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
