Major global markets are fearful of a possible recession and this has been reflected in major equity markets. Aggressive inflation-fighting measures in the United States, Europe and the rest of the world are causing investors to take a pessimistic view of the economic future.
The New York Stock Exchange closed yesterday with its major equity indexes higher after the market found relief in the US Federal Reserve’s rate decision, but that optimism faded today.
“The Fed will accept recession risk in order to generate below-trend economic growth,” wrote Dennis DeBusschere, founder of 22V Research. “Powell made it clear that reducing inflation is essential and that ‘the worst mistake would be not to restore price stability,'” he added.
At the end of the day, the Dow Jones fell by 2.42% and the S&P 500 by 3.25%. Both Wall Street stock indices had just broken a five-day losing streak.
“The market got what it wanted, but maybe, just maybe, raising 75 basis points in a rapidly weakening economy is not the best idea,” wrote Peter Tchir, head of macro strategy at Academy Securities.
The Nasdaq posted a 4.08% loss and ended its two-day period higher.
In Europe, red also prevailed and the main stock markets of the old continent closed on a drop of almost 3%. The Euro Stoxx 50 lost 2.96% as central banks in the zone raised interest rates and promoted new tools to deal with inflation and a weakening economy.
Yesterday, stock markets in Europe closed higher ahead of the US Federal Reserve’s monetary policy decision.
On the other hand, Asian markets also closed, for the most part, with losses.
Chile was no exception to the world and the Santiago Stock Exchange was infected with international pessimism. The IPSA, the main local stock market index, fell by 2.11% and is about to fall below the value of 5,000 points.
“The IPSA is dragged down by the overreaction of international markets to possible rate hikes with excessively exaggerated frequency and magnitude,” said Guillermo Araya de Renta 4.
Among the main losses, the appearance of Socovesa (-7.50%), Vapores (-6.09%), SQM-B (-5.64%) and Ripley (-5.15%) stands out.
Given this scenario, the Santiago Stock Exchange is in line with other stock exchanges in the region, which closed in negative territory. However, Colombia’s main stock index, Colcap, closed up 0.66% and Brazil’s indicator, Ibovespa, did not post losses as it was closed due to a public holiday in this country.
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