Meanwhile, the selective S&P500 index registered a decrease of 1.8% to 3,652.90 points, after falling 2.5%. Finally, the Dow Jones Industrials fell 1.2% and cut its initial fall of 2%, to 29,320.69 points.
Yesterday, the main New York indicators registered increases of around 2%, opening the hope that they will achieve small gains for the week. However, they are still on track to close out their worst month since June. The Nasdaq Composite leads the monthly losses, down 6.5%, while the Dow and S&P are on track to close down 5.8% and 5.9%, respectively.
Investors face the threats posed by jarring moves by central banks in recent days, with Fed officials adamant on further monetary tightening, the Bank of England unveiling a 65 billion pound ($71 billion) plan to support government debt and the pound sterling, which has fallen to record lows against the dollar in recent days. The decision marked a radical departure from the aggressive tightening campaign that many central banks around the world have undertaken to deal with rising inflation.
Fed officials continue to insist on their hawkish message, with Atlanta Fed President Raphael Bostic saying he supports raising rates by another 1.25 percentage points by the end of this year.
According to Criteria, “the financial market seems to start rotating around a new concern: the risk of an economic recession in the US and a slowdown in global activity is becoming more and more evident. In the last week, companies from various sectors and countries expressed concerns regarding the health of the world economy, in a generally more restrictive monetary environment and inflation that remains high.
As for the European stock markets, the main declines were registered in the Italian stock market, which fell by 2.4%, followed by the Euro Stoxx 50, by 1.6%. For its part, the CAC 40 lost 1.5% and the German stock market (DAX), 1.7%.
News that sowed fear in the markets
This Thursday, it was learned that the inflation in Germany hit its highest level in more than a quarter-century in September, fueled by rising energy prices no longer cushioned by popular easing measures, data released on Thursday showed.
Consumer prices, harmonized to make them comparable with inflation data from other European Union countries (IPCA), rose 10.9% in the year, the federal statistics office said. A market survey forecast a 10% rise. This is the highest reading since the start of comparable data issuance, dating back to 1996.
At the same time, the British prime minister ratified her change in economic policy to avoid recession at the cost of giving up inflation.
“We had to take urgent action to get our economy growing, to get the UK moving, and also to tackle inflation, and of course that means making controversial and difficult decisions,” he told BBC radio.
“But I’m willing to do it as prime minister because what’s important to me is that we get our economy going,” she added.
However, his fiscal plan, presented on Friday by the finance minister, Quasi Kwarteng, it triggered a crisis of confidence in the government, sending the value of the pound and government bond prices tumbling and rattling world markets. Truss said her government would not change course.
After laying out 45 billion pounds of unfunded tax cuts, he said he would detail everything from childcare costs to immigration, planning and financial regulation in coming weeks. A more comprehensive tax return on November 23 will detail the cost of borrowing and measures to reduce debt.
Investors and economists have said they cannot wait another eight weeks for details as borrowing costs are high and markets are volatile.
In addition to the risk it poses to pension funds, rising borrowing costs have led to the withdrawal of the cheapest mortgage offers and a jump in interest rates on loans to companies.
The Bank of England intervention had an immediate impact on lower bond yields on Wednesdaybut investors still think it will raise rates by at least 1.25 percentage points, to 3.5%, by November 3, the date of its next scheduled announcement.
“This is the right plan,” Truss told the BBC. Asked if it’s time to back down, she said, “No, it’s not.”
The return on British public debt rose moderately on Thursday and the pound sterling fell 0.5% to $1.0797, bringing its fall in September to almost 7% and its collapse so far in year to almost 20%.