World stock markets and luxury stocks still in decline
After a dark session on Tuesday, the world’s stock markets continue to fall as negotiations on the payment of the US debt remain deadlocked. Luxury goods stocks are also experiencing record losses.
This Wednesday, European stock markets are probably experiencing their worst session since the banking crisis in March, as tension and risk aversion spread to all markets due to the difficult negotiations on the US debt.
The European stock markets are thus heading for a third consecutive day of decline. Around 5:30 pm, Paris (-1.8%) reached its lowest level since March 30, while Frankfurt (-2.08%), Milan (-1.90%) and Zurich (-0.9%) were also in trouble.
The Eurostoxx 600 index fell by 1.92%, heading for its worst session since March 15. London (-1.81%) was also down, reaching its lowest level since April 6. Although British inflation slowed sharply in April, to 8.7% year-on-year, it remains well above analysts’ expectations. However, this is the first time since August 2022 that price inflation has fallen below 10%.
In Asia, Tokyo (-0.89%), Hong Kong (-1.62%) and Shanghai (-1.28%) also ended in negative territory.
The teams of U.S. President Joe Biden and Republican negotiators, who met on Monday, tried again today to reach a delicate compromise on the budget. The attempt was not immediately successful.
As a result, although the threat of default has not really worried the markets so far, “traders are starting to protect themselves against the risk of decline”, observed Pierre Veyret, analyst at ActiveTrade.
In New York, the Dow Jones lost 0.67% while the S&P 500 gave up 0.76% and the Nasdaq Composite 0.84%.
In the bond market, short-term rates continue to rise. The 3-month U.S. government bond yield remains near a 22-year high of 5.29%. The 10-year bond yield remained nearly stable at 3.68%.
In addition, the nervousness of market participants could be exacerbated by the release at 18:00 GMT of the minutes of the last meeting of the U.S. Federal Reserve (Fed) in early May. During which its chairman, Jerome Powell, had opened the door to a pause in the rate hike.
Since then, the markets have hardened their expectations regarding future monetary policies, following several interventions perceived as less accommodating from the members of the Fed.
Luxury goods in free fall
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