“We are in the middle of a bear market” – Nervousness returns to Wall Street

Wall Street

Sentiment on US stock markets deteriorated on Tuesday.

(Photo: AP)

new York On Tuesday, Wall Street was dominated by concerns about the consequences that the Ukraine war will have on the global economy. It is true that only one percent of the sales of companies from the S&P 500 come from Russia and Ukraine, as calculated by the analysis company FactSet. Nevertheless: “We are beginning to understand that there is no easy way out of this tragedy,” explained capital market expert Mohamed El-Erian, who advises Allianz, among other things, on the US stock exchange broadcaster CNBC.

Investors are particularly concerned about rising energy prices. “The strategy of excluding energy-related transactions from sanctions is unlikely to be effective,” El-Erian said. Investors are now increasingly recognizing that. And high energy prices “are a severe damper on economic growth.”

Equities ended weakly, investors once again fled to safe havens such as gold and US Treasuries.

>> Read here: Dax closes below 14,000 points – yield on the ten-year federal bond slips into the red

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Wall Street closes with significant losses

The Dow Jones Industrial closed down 1.86 percent at 33,295 points. The market-wide S&P 500 fell by 1.6 percent to 4306 points. The technology-heavy selection index Nasdaq 100 fell by 1.6 percent to 14,006 points. Bank stocks were the biggest losers on Tuesday. The high demand for US government bonds caused yields to fall significantly, which traditionally puts financial stocks under pressure. America’s largest bank, JP Morgan Chase, lost 3.8 percent and was at times its cheapest in a year. Other large financial houses such as Goldman Sachs and Bank of America also suffered a similar downward trend.

Oil companies, on the other hand, were in demand. Chevron’s shares rose by four percent. The company had raised the target range for its annual share buyback target, which made the group even more attractive in the eyes of investors. ConocoPhillips shares advanced 2.2 percent and ExxonMobil rose 1 percent. “We’re in the middle of a bear market,” warned Ritholtz Advisors’ Josh Brown. “And I’m hoping that we’re about halfway there, both timing and downtrend.”

Government bonds are increasing

US Treasury bonds again rose significantly as investors flee to safe havens. Yields on 10-year government bonds closed at 1.708 percent, their lowest level since early January, after falling sharply on Monday.

El-Erian assumes that the US Federal Reserve (Fed) will raise interest rates less frequently this year than originally thought. “The market is now only expecting four to five rate hikes, but in my opinion that’s still too much for this year.” Before the start of the Ukraine crisis, economists had expected seven to eight increases.

Gold and oil continue with tailwinds

Gold prices rose 1.9 percent. Brent crude rose seven percent to 104.97 percent. WTI increased by eight percent. Announcement that the US and other countries plan to put strategic oil reserves on the market failed to halt the uptrend on Tuesday. The next important target is $125 a barrel, believes John Kilduff, a partner at Again Capital.

Investors are particularly worried about delivery failures. There are also growing fears that the US and Europe might not be able to impose sanctions on Russia’s lucrative energy sector. “It’s still being ruled out, but the question is how long this announcement will hold up,” said Helima Croft, energy expert at RBC Capital Markets.

cryptocurrencies

The upswing in the crypto market continued on Tuesday. The largest digital currency, Bitcoin, gained a good one percent and cost $44,116. Ether gained almost two percent and traded just below the important $3000 mark. l Both Russia and Ukraine have strong interests in cyber money. Analysts observed that more rubles were swapped into the stable currency tether on Tuesday than ever before. Tether is linked to the dollar and is considered to be particularly lightly regulated compared to other stablecoins.

More: Investors see the current price level on the stock market as a buying opportunity

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