U.S. stocks have their worst week since June

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Stock update

The U.S. stock market ended its worst week in nearly three months on Friday, as concerns about inflation have once again weakened optimism that the central bank will continue to support financial markets.

The Standard & Poor’s 500 Index fell 0.8% in New York, while the technology-focused Nasdaq Composite Index fell 0.9%. Both benchmark indexes showed a weekly decline of 1.6%, their worst performance since mid-June.

Data on Friday showed that US ex-factory prices rose 0.7% month-on-month in August, exceeding the 0.6% increase expected by economists, and investor confidence was hit.

Ian Lyngen, interest rate strategist at BMO Capital Markets, said that due to the continued supply chain disruption caused by the Covid-19 pandemic, inflation readings have exacerbated “continuing concerns about rising cost structures”.

Jorge Garayo, head of global inflation strategy at Société Générale, said: “The market is beginning to think that 2022 may be a year when inflation remains high.”

Gallayo added: “I don’t see anything that convinces me when this interruption will be resolved,” he said, referring to Computer chip to cabinet Part of the reason is that Asian producers have stopped production due to the coronavirus.

U.S. Treasury bonds were sold off, and the 10-year U.S. Treasury bond yield rose by 0.04 percentage points to 1.34%. The rate of return is inversely proportional to the price.

In Europe, sovereign debt is not favored either. One day later, the European Central Bank said It will be “moderately” slow Purchase bonds under its 185 million euro emergency monetary stimulus plan.

The yield on 10-year German government bonds (the Eurozone benchmark safe asset) climbed 0.03 percentage points to minus 0.33%, while the yield on equivalent Italian bonds jumped to 0.7% by the same amount.

The President of the European Central Bank, Christine Lagarde, hinted that bond purchases may continue in another form in 2022, and said that “there is a long way to go to eliminate the damage caused by the pandemic to the economy” .

Strategists at Bank of America said that the ECB’s actions “symbolize the great changes in the future.” “The central bank, as the preferred buyer, is retreating.”

Antonio Cavarero, investment director of Zhongli Insurance Asset Management, believes that central bank officials are still reluctant to reduce the size of emergency bond purchases, which has depressed bond yields and increased the relative attractiveness of stocks.

“Don’t expect monetary tightening to rise in a straight line,” he said. “Central banks are sending out test signals to see if markets and economies can accept the idea of ​​raising interest rates.”

European stock markets closed down this week. The region-wide Stoxx 600 index closed down 0.3%, with a weekly decline of 1.2%, the biggest drop since mid-August.

The U.S. dollar index, which measures the U.S. dollar against six currencies, rose slightly by 0.13%. Due to production delays caused by Hurricane Ida, Brent crude oil, the oil benchmark, rose 2% to US$72.84 per barrel.

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