The slide on the US stock exchanges continues. On Friday, investors plagued by recession fears pulled the ripcord on risky investments and sent stock market prices to their lowest levels of the year. As oil prices continue to plummet, the dollar is at its highest level in 22 years.
A pitch-black week on Wall Street has come to an end with renewed heavy daily losses. The prospect of further interest rate hikes and growing fears of a recession weighed heavily and led to a global sell-off. The Dow Jones index fell to a yearly low and is down 4 percent on the week. Following the third 75 basis point rate hike on Wednesday, Fed President Jerome Powell emphasized that the Fed’s top priority is fighting inflation – even at the expense of economic growth.
The Dow Jones index closed 1.6 percent lower at 29,590 points – 20 percent below its record level in early January. The S
The fact that the purchasing manager indices for manufacturing and the service sector for September were better than expected did not slow down the sell-off either.
The dollar rallied on the prospect of more sharp rate hikes from the US Federal Reserve. The dollar index rose 1.5 percent. In return, the euro went down. It fell to $0.9666, its lowest level since its physical launch in 2002. The euro could fall further against the dollar as the US Federal Reserve maintains its tight monetary policy and the eurozone is threatened with recession, UBS Global Wealth said Management. Analysts expect the shared currency to slip to $0.96 by the end of the year.
The pound sterling was even more under massive pressure. The trigger was the UK government’s comprehensive package of tax cuts and regulatory reforms, which it intends to use to revive the UK economy, which is plagued by inflation. The pound lost 3.5 percent to $1.0862.
Oil prices fell sharply by as much as 5 percent, posting their fourth straight weekly loss as central banks around the world continue to aggressively hike interest rates. This will likely dampen economic activity and reduce demand for energy, it said. The strong dollar also weighed on oil prices as it makes US dollar contracts more expensive for foreign buyers. WTI fell below $80 a barrel for the first time since early January.
Yields on the bond market tended to be mixed. At the short end, inflation concerns and the Fed’s increased interest rate projections went up again, albeit less strongly than in the past few days. The yield on 10-year paper, on the other hand, fell 2.6 basis points to 3.69 percent. The strong dollar and the prospect of further significant interest rate hikes caused the price of a troy ounce of gold to fall by 1.6 percent. “The trend of rising interest rates is likely to continue for a while, which means that gold, in turn, could also remain under selling pressure for some time,” said Rupert Rowling, market analyst at Kinesis Money.
Boeing shares are down 5.4 percent. The US aircraft manufacturer has to pay a fine of 200 million dollars. Boeing “negligently” violated the anti-fraud provisions of the US securities laws, the Securities and Exchange Commission said in a statement released on Thursday. Boeing is said to have misled the public about the safety of its 737 Max aircraft after the deadly plane crashes in 2018 and 2019.
Qualcomm shares lost 2 percent despite positive-sounding statements at an investor event. The chip manufacturer can therefore hardly save itself from orders for the automotive industry and, in view of the good order situation, has increased its medium-term forecasts for sales in the business with chips for the automotive industry. However, the technology sector is particularly sensitive to the prospect of rising interest rates, it said.
