US stocks continue to decline as central banks challenge 2023?
As monetary authorities curb excitement over slowing inflation, investors get a hangover.
After a sell-off in the prior session that was sparked by warnings from several Central Banks that interest rates are likely to remain high year for longer to combat inflation, US stocks fell even further on Friday.
The tech-heavy Nasdaq composite was down 1.4%, while the Wall Street s&p 500 was down 1.5% at its lowest point in a month in afternoon New York trade. The European Stoxx 600 index dropped 1.2%, and the London Ftse 100 index sank 1.3%.
The actions follow a week in which the Federal Reserve, the Bank of England, and the European Central Bank all delayed the rate at which they raised interest rates while issuing warnings that additional tightening of monetary policy would be necessary.
Agnes Belaish, chief European strategy at the Baring Investment Institute, claimed that the hawkishness of numerous Central Banks had left the financial market stunned. It’s crazy how prices are rising in emerging markets after a central bank meeting.
Economic analysts believe that inflation has peaked in the US, UK, and Europe, but any positive news this week has been overshadowed by pessimistic predictions of sluggish economic growth and increasing unemployment.
Longer-dated government bond yields in the US and Germany have decreased.
shorter-dated notes with below-average yields suggest that both regions’ economies are about to slow down.
The ECB is presenting the idea that it has just begun, while other significant central banks have begun to plan for the conclusion of their hiking cycles, according to Carsten Brzeski.
According to Brzeski, the central bank’s announcement that interest rates would rise “substantially” and steadily constituted a “hawkish turnaround” and implied that “the last doves must have left the ECB building.”
The eurozone’s manufacturing and services activity contraction did, however, ease more than anticipated in December, according to data released on Friday. S&P Global’s flash eurozone composite purchasing managers’ index increased to 48.8 in December from 47.8 the month before. A score of less than 50 signifies that the majority of firms experienced a decline from the previous month.
According to BoE governor Andrew Bailey, economic activity in the UK fell for the fifth consecutive month in December, and the nation is predicted to enter a recession “for a considerable period.”
Oil prices decreased, with Brent crude, the global oil standard, down 2.7% to $79.12 per barrel. With temperatures expected to rise in late December, natural gas prices plunged, with Dutch TTF gas futures, the benchmark European contract, falling 13% to €117.50/MWh.
Following a session of erratic trading, currency markets were relatively quiet on Friday, with the dollar remaining unchanged against a basket of six other currencies.
Asian equities were uneven, with South Korea’s Kospi remaining flat, Japan’s Topix declining 1.2%, and Hong Kong’s Hang Seng index rising 0.4%. China’s CSI 300 remained constant.