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Tuesday, October 4, 2022

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    Wall Street goes to the canvas with the prospect of higher interest rates; Dow Jones closes near year low

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    (Image: Reuters/Brendan McDermid)

    You New York stock indices closed the last trading session of the week with a strong fall, with investors still assimilating the new reality of interest rates out of neutrality.

    At the end of the auction, the S&P 500 fell 1.72%, the Nasdaq lost 1.80% and the Dow Jones lost 1.62%. It was for a very short time that the Dow Jones Index missed the 2022 low recorded in June, signaling that the bear market is more alive than ever.

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    Among the main losses of the day are the shares of American oil companies, penalized by the sharp drop in the oil market.

    Has the chip dropped?

    Wall Street struggles with the reality of the ongoing monetary tightening in the United States. Similar decisions by the ECB, the Bank of England and the Swiss central bank do not help to alleviate the feeling that a recession will have to be the capital price to be paid for inflation to return to the target.

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    In contrast to the anticipation made by the Brazilian Central Bank and other authorities from emerging countries, the Central Banks of the most advanced economies took time to reverse the paradigm of the expansionary monetary policy administered until 2021.

    There is, however, a period of time, between six and nine months, that separates the action of central banks and their effects on the real economy. Until then, and in the unlikely event that the authorities radically alter the course of monetary tightening, the international equity market should be subject to successive waves of risk aversion.

    Brazilian ADRs track widespread risk aversion

    External pessimism took Ibovespa’s performance hostage, causing the index to fall more than 2%. At listed ADRs in New York followed the downward movement, with the index that registers the 20 most liquid Brazilian stocks losing more than 5%.

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    Source: Moneytimes

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