Investors flee risky assets as recession fears resurface
Fears of an economic recession dominate the markets and the sell-off leaves the rebound experienced by equity markets yesterday as a mirage. The Ibex-35 lost 1.5% to 8,172 points, with more than 2% declines for financial companies.
However, the losses are comparable to those of the rest of the European markets, also affected by the heavy losses that Wall Street closed last night, of more than 3% in the Nasdaq technology index.
In this environment of mass selling, investors are fleeing to assets that are perceived as less risky, such as long-term fixed income. And those purchases drive up the price of the bonds and lower their yield, which moves the price inversely. A move that makes clear that the interest rate hikes to curb inflation are today assumed by the market, but not the fear of their impact on the economic recovery.
The yield of the 10-year German bond will fall from 1% to 0.91%, while the US bond will run from 3% to 2.8% at the same maturity. Recession alarms are also weighing on the yield on the Spanish bond, which has even lost the 2% level and stands at 1.95%.
The sales panic has also hit cryptocurrencies hard, with many investors realizing in recent weeks that these virtual assets are no longer a diversifying element of portfolios to consolidate themselves as a riskier asset.
Bitcoin sinks more than 10% and blows up all its supports. He has already lost the $30,000 and is now on his way to giving up the $25,000 as well. For its part, Ethereum is down 15%. But the crypto that has suffered the most in recent hours is again Terra Luna, whose value has been practically reduced to ashes with a collapse of more than 96% in just 24 hours.
It is true that in the crypto market there are many stories of successful births followed by much faster disappearances. But never before had it happened so aggressively with a ‘stable currency’, as cryptocurrencies are called that are born under a format of ‘tokens’ associated with the value of a ‘fiat’ currency (such as the dollar or the euro), to material goods such as gold or real estate, or to another cryptocurrency.
We’ll have to wait for Wall Street to open to see if European stocks hold up to the sharp declines from the opening. But at the moment everything points to this being the case. On the national trading floor, investors will have another set of all-important corporate results that could also mark the future of the day.
At the moment, the market already notes Telefónica’s accounts, with a net profit of 706 million euros until March, 20% less than in the same period last year, but it has managed to grow in turnover in all its markets.
In the commodities market, the oil price resumes its downward path with declines of 1%, leaving the price of a barrel of Brent, a benchmark in Europe, at USD 106, while that of West Texas in the United States is around 104. dollars.
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.
