On the US stock exchanges, the Dow Jones falls back into "bear market mode" for the first time in over two years. As the dollar strengthens, the euro briefly plunges to a new record low in response to the post-election swing to the right in Italy.
After the heavy losses in the previous week, Wall Street has shown itself again with deliveries. The Dow Jones index again marked a low for the year at 29,161 points. Uncertainty and risk aversion remained high amid expectations of further strong interest rate hikes and a resulting increase in the likelihood of a recession, they said. The Dow Jones index also fell back into "bear market mode" for the first time in more than two years, losing more than 20 percent from its recent high.
The Dow Jones index lost 1.1 percent to 29,261 points. The S
"Inflation remains high, the Fed is raising interest rates rapidly and is on the verge of lifting them above neutral, recession risks continue to mount and current market valuations do not appear to accurately reflect the likelihood of a recession," said Jason Pride , Chief Investment Officer of Private Wealth, and Michael Reynolds, Vice President of Investment Strategy, at Glenmede.
US Federal Reserve Chairman Jerome Powell recently emphasized that combating high inflation is the Fed's top priority, even if this is at the expense of economic growth. The new President of the Federal Reserve Bank of Boston, Susan Collins, made a similar statement. She wants to lower inflation to 2 percent even if this would weigh on the economy. The US Federal Reserve decided last week to hike interest rates for the third time in a row by 75 basis points.
On the foreign exchange market, the dollar continued to be sought after as a safe currency haven and against the background of rising US market interest rates. The dollar index gained 0.7 percent. The euro briefly fell to a new record low since its physical launch in 2002 in response to the swing to the right following Italy's election. The pound also showed a setback. The reason for this are concerns about the British government's new financial policy, which envisages far-reaching tax cuts and a cap on energy prices, with the result that debt will rise sharply. According to analysts at the Bank of England, this also makes it more difficult to tackle inflation.
Yields continued to rise sharply on the bond market. Investors are bracing for another 75 basis point hike by the Fed in November unless inflation falls more than expected, sources said. The 10-year yield rose 19.2 basis points to 3.88 percent. It is thus approaching the four percent mark that was last exceeded in 2008.
Oil prices fell significantly, with Brent and WTI falling as much as 2.7 percent. "Global macroeconomic risks and energy policy risks in Europe continue to support the US dollar, making oil even more expensive in European markets already struggling with inflation and leading to a further deterioration in the oil demand outlook," Troy said Vincent, Market Analyst at DTN.
The firm dollar and rising bond yields sent gold prices down. The interest-free precious metal fell to its lowest level in around two and a half years. "The series of rate hikes over the past week has put significant pressure on gold prices in the near term and with no prospect of central banks changing course in the coming months, the medium-term prospects for the precious metal also look bleak," Rupert said Rowling, market analyst at Kinesis Money.
Chevron shares fell 2.6 percent. The oil company announced that it has halted production at two platforms in the Gulf of Mexico due to the approach of Hurricane Ian. Experts warned that the hurricane would "continue to strengthen rapidly" and approach the west coast of Florida on Wednesday and Thursday.
Amazon will host a second global sale day in October, giving consumers an early opportunity to shop for holiday bargains. It is the first time that the group has held two such purchasing events in one year. Amazon shares gained 1.2 percent.
Biontech (minus 0.5 percent) and Pfizer (minus 0.6 percent) are aiming for emergency approval in the USA for their corona vaccine adapted to the Omicron variants BA.4/BA.5 for children aged five to eleven years. They have submitted the corresponding application to the US health authority FDA.
