Investors are extremely cautious after the worst day in two years in the world’s major financial market
Maximum caution in European stock markets after Wall Street’s severe collapse yesterday in what was the worst session of the past two years for the world’s major financial market, with declines of about 4% in the Dow Jones and the S&P 500 and that they approaching 5% in Nasdaq’s technology index.
The first two indicators marked their lows for the year at the end of the day, with the first already losing 17.7% in the year and the second 13.3%, as Link Securities analysts recall.
Against this backdrop, the Ibex-35 fell 0.85% to 8,404 points in the early stages of trading, although the Wall Street opening is likely to mark the final trend in the market.
IAG is leading the declines with losses of more than 2% amid doubts about the economic recovery that also hit the price of other national stock market giants such as Inditex, which is yielding more than 1%.
While investors were well aware of some news about central banks’ monetary policy, yesterday the difficult balance between the fight against inflation and the impetus for economic recovery was once again apparent.
And not just because Treasury Secretary (and former Fed Chair) Janet Yellen warned of a possible entry of the global economy into a period of stagflation. This time it is the retail companies (retailers) who have released the fear of rising costs (caused by various factors) in their presentation of the results, which is already unaffordable for many of them.
Specifically, giants like Target or Walmart have warned of “unexpectedly high” costs and their impact on the income statement, due to problems in supply chains, fuel or, in the case of Walmart, “because of high wages”.
In other words, investors are beginning to realize that large companies won’t last much longer by restricting margins to prevent this increase in costs being passed on to the price of their products. And that pleases a market in which a recovery in consumption is the key to getting back on the road to growth.
Especially since Target recognized that it has already been found that consumers have begun to adjust their purchasing habits, spending less on items classified as leisure activities, such as household items and clothing, which tend to have higher margins, and making more purchases of other goods.
“This kind of attitude usually takes place when consumers lose confidence in the future of the economy and thus in the future financial situation,” they indicate from Link Securities.
On the commodities market, the price of a barrel of Brent, a benchmark in Europe, continues to rise above $110. For its part, the US West Texas costs around 108 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.
