Wall Street fell sharply and the S&P 500 entered a bear market due to a resurgence in the paper sell-off. US equities continue to be impacted by macroeconomic inflation data from the North American country. The Dow Jones fell 2.79%, the S&P 500 3.88% and the Nasdaq 4.68%.
Wells Fargo Advisors stated that “Investors continue to weigh the implications of Friday’s higher-than-expected inflation reading.”
The S&P 500 marked its lowest level since March 2021 and extended its losses from its January record to over 21%. The benchmark has closed in bearish territory, which is when it falls more than 20% below its peak.
Stock indices added to losses late in the session after an article in the Wall Street Journal mentioned that the Fed would consider raising rates by 0.75% on Wednesday.
Inflation data raised expectations of an aggressive tightening of monetary policy by the Federal Reserve. The consumer price index (CPI) rose 1.0% in May, more than tripling April’s 0.3% reading and beating expectations for a 0.7% rise. The annual figure jumped 8.6% from the previous reading of 8.3% to a new 40-year high.
Investors’ attention is now focused on the Fed’s meeting this week, with officials expected to raise rates by at least 0.50% on Wednesday. ANDThe latest summary of economic projections should also be in the spotlight.
Stock markets have tumbled this year as investors weigh upside risks to global inflation and central bank plans to undo stimulus policies that have kept economies and markets afloat during the pandemic.
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Turning to the fixed income market, expectations of higher rates were evident for bonds as yields continued to rise. ANDThe yield on the 10-year note headed for a 2011 high, hitting 3.33%, posting its biggest one-day gain since March 2020. The yield on the more Fed-sensitive two-year note rose 30 basis points to 3.22%, the highest level since 2007.
SP IPSA was no exception and joined the international scene, falling 2.02% to 5,132.22 points.
At the local level, the data on the flows of institutional investors for the month of May was known, according to a report by Bice Inversiones. According to what was declared by the firm, the AFPs recorded a net sale of local shares of 25.6 million dollars, thus cutting three consecutive months of purchase and reaching net sales of local shares of 644 million dollars. dollars in the past 12 months.
In any case, Bice indicated that funds at the consolidated level increased their exposure to local equities during the month to 6.8% of total assets under management. In particular, the largest local equity sales were seen in Banco de Chile (US$58.3m), followed by Vapores (US$47.9m) and SQM-B (US$43.5m). million US dollars). On the other hand, the largest purchases were recorded in Falabella (66.4 million dollars), followed by Bsantander (35.2 million dollars) and Cencosud (15.5 million dollars).
Perspectives in Europe and Asia
Landing in Europe, the main places operated with red numbers: the Euro Stoxx 50 fell 2.69%, London’s FTSE 100 fell 1.53%, Frankfurt’s DAX lost 2.43%, Paris’ CAC 40 fell 2.67% and Madrid’s IBEX 35 fell 2.47%.
The global economic outlook affects the performance of shares in the Old Continent and the yield of the German bund rises to 2.50%.
The more defensive profile of investors increased appetite for the dollar and the euro deflated by US$1.07, while the pound sterling fell to US$1.22.
The combination of the rising US currency and interest on debt is dampening the advances of a classic safe-haven asset like gold. The precious metal barely manages to break away from the usual late benchmark, US$1,850 an ounce.
Stock markets in Asia ended the session with losses given the global outlook for the economy: Tokyo’s Nikkei fell 3.01%, Hong Kong’s Hang Seng fell 3.39% and Mainland China’s CSI fell 1.17%.
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