Fed ‘hawks’ dampen investor euphoria by saying interest rates still need to rise much higher to keep inflation in check
Investors chose to pull back from risky assets on a day when the burden of geopolitical uncertainty is mixed with resurgent recession fears. The Ibex-35 lost 0.75% at the end, although it managed to keep the 8,000 points it was about to lose in the most tense moments of the session.
Aena led the declines (-2.17%), followed by Cellnex (-2.07%), Repsol (-1.91%), Fluidra (-1.85%), Endesa (-1.81%), Grifols (-1.80%), Banco Santander (-1.79%) and Solarie (-1.72%). In positive territory, they had CaixaBank (+1.16%), Colonial (+1.05%), Bankinter (+1.05%), Rovi (+0.72%), Merlin (+0.56%), PharmaMar (+0.50%), Indra (+0.43%), Mapfre (+0.33%), Telefónica (+0.295), Meliá (+0.29%), Ferrovial (+0.08%) and Iberdrola (+0.05%).
Markets were pressured during these sessions by the fall of Wall Street. During Wednesday’s session, technology stocks suffered again as much stronger-than-expected retail sales data freed the Federal Reserve (Fed) to raise interest rates to the pace it sees fit, despite market discounts the body will curb in December with a increase of 50 basis points, compared to the 75 points of the last meetings.
In addition, despite this improvement in data, retail-linked stocks were severely penalized after Target reported worse-than-expected results. “What set alarm bells ringing among investors was their managers warning that consumers are showing increasing signs of stress and are reducing their discretionary (non-essential) purchases,” Wall Street analysts say.
Added to that were new statements from members of the Fed, aiming to lessen the euphoria investors have experienced in recent weeks. For example, the president of the San Francisco Fed, Mary Daly, made it clear that the Fed has no plans to halt its rate hikes and can still raise rates by more than 1% from current levels. But the one that caused the biggest impact was James Bullard, head of the St. Louis Fed, who assured that the restrictive monetary policy has not yet had the desired effect on inflation, and assured that interest rates would fall within a range of 5%. have to move. 7% Until now, the market had expected the peak to be 5%.
The feeling is similar in Europe, where inflation rose again to 10.6% in October despite recent rate hikes, a tenth less than expected, but at levels never seen before.
Meanwhile, the price of crude oil in the commodities market continues to fall, with a barrel of Brent, a benchmark in Europe, at $92.1, while West Texas in the United States stood at $84.6. .
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
