Collective declines in US stocks.. and Dow Jones survives the loss
Most of the US and European stock indices declined on Friday, with the exception of the Dow Jones Industrial Average, which managed to end the day up by about 130 points, representing 0.39% of its value, while other indices remained in pain, due to the market’s expectation of imposing more stringent monetary policies on the part of the Board of Directors. The Federal Reserve, and perhaps some central banks in Europe.
One day after two voters declared their preference for the bank to continue raising interest rates, the US and European stock markets were red for most of the trading session on Friday, and the slight rise in the Dow Jones index did not erase its third consecutive weekly loss. While the S&P 500 lost more than a quarter of a percentage point, the Nasdaq lost more than half a percentage point.
Although the losses were collective, the shares of energy companies were the most declining, with oil prices declining by more than three dollars in some periods of the session, and also with the growing fears of raising interest rates and increasing supplies that exceed global demand during the coming period. Devon Energy shares lost 4.29% of their value.
In a related way, US Treasury yields for two years and ten years rose to levels not seen since last November, which in turn affected the stock market and contributed to the decline in its indices. The benchmark 10-year bond yield recorded 3.84% for the first time from January 3.
In Europe, European stocks continued their decline on Friday from their highest levels in a year, which they touched earlier in the week, as energy and technology stocks led the losses, amid growing fears that the Federal Bank would stick to its hawkish policies for a longer period than expected.
The European Stoxx 600 index ended its trading down 0.2%, after touching the highest level in a year in the previous session, with the support of the French blue chips.
And after the publication of the US producer price report in January, which showed prices rising more than expected, it became clear that the Fed had to do more if it wanted to deal a knockout blow to stubborn inflation.
Energy stocks fell 1.9%, leading the Stoxx 600 losses, after crude prices fell due to fears of raising US interest rates, which in turn affects demand. Technology stocks, which are most affected by changes in interest rates, followed, losing 1.7% of their value.
And the losses of the European index were limited by shares of companies in the health care, utilities and communications sectors, which rose by rates ranging between 0.6% and 0.8%.
In a related way, the price of oil fell by two dollars a barrel at the settlement today, Friday, to end the week in decline, amid fears on the part of dealers that demand will be affected by any future hike in US interest rates, or that supplies during the coming period will be more than the volume of global demand.
Stephen Brennock of (BVM) oil brokerage told Reuters: “The tension over interest rate hikes has returned with ferocity.”
Brent crude futures fell $2.14 a barrel, or 2.5%, to settle at $83 a barrel, bringing its losses to 3.9% for the week. US West Texas crude fell $2.15, or 2.7%, to end trading at $76.34 a barrel, a weekly loss of 4.2%, compared to last Friday’s closing price.
