Wall Street and the Chilean stock market ended the session this Tuesday with losses thanks to the Strong Purchasing Managers’ Index (PMI) in the United States that worsened the outlook for the Federal Reserve, added to the disappointing projections of large retailers and the renewed geopolitical tensions between Russia and the Westall this following an extended weekend in the American square for yesterday’s holiday.
At the close of the New York Stock Exchange, the Nasdaq Composite lost 2.50% -its biggest daily drop since December 15-, the S&P 500 fell 2.00% and the Dow Jones fell 2.06%. In the credit market, the two-year Treasury note jumped 11.4 basis points to 4.73%, its highest level since July 2007.
BlackRock: “We do not believe the Fed will cut rates in 2023”
Walmart (0.59%) disappointed in its earnings forecast for 2023but it beat estimates for reported revenue and earnings, positioning itself as the only Dow Jones stock with a positive performance. Home Depot (-7.09%) also did not meet expectations in its projectionssomething that in this case led it to be located in the last place of the index.
In the Santiago Stock Exchange, the S&P IPSA fell 1.30% to 5,261.37 points -lowest since January-leading the losses Cencoshopp (-5.35%), Mallplaza (-3.77%) and SQM-B (-3.43%). The price of the dollar in Chile rose above $800.
On the European side, the regional Euro Stoxx 50 lost 0.49%, the FTSE 100 in London fell 0.46%, the CAC 40 in Paris fell 0.37% and the DAX in Frankfurt fell 0.52%.
In Asia, Tokyo’s Nikkei 225 was down 0.21% and Hong Kong’s Hang Seng fell 1.71%, while mainland China’s CSI 300 gained 0.26%.
Economy and politics
According to S&P Global in its February preliminary report,the services PMI in the US jumped from 46.8 to 50.5 pointswhen the consensus of the analysts pointed to an advance of only tenths.It is the first time since June 2022 that the index steps on expansion territory (over 50 points).
The US economic strength allows the market to anticipate a more restrictive stance from the Federal Reserve. Futures traders raised their expectations for the terminal rate the Fed is expected to reach in August, from 5.28% to 5.36% in 24 hours.
“Although stocks have staged an impressive rally so far this year, markets are still trying to adjust to the reality that the Fed is unlikely to turn around,” BMO Family Office chief investment officer Carol Schleif was quoted as saying. Bloomberg.
“Rather it is focused on fighting inflation, which suggests that investors should be prepared for interest rates to stay higher for longer,” he added.
Meanwhile, the signs of recession in the real estate market are still in force. Second-hand home sales fell 0.7% month-on-month in January to the lowest since 2010, different from the 2.0% rise expected by analysts. In addition, the series for the previous month was revised downward.
Equities have been pressured lower early on by news from the geopolitical front. “The main Chinese diplomat, Wang Yi, will discuss the war in Ukraine with senior Russian officials this week. The meeting raises alarm among Western countries, due to the ties that might be strengthened between Beijing and Moscow,” Banchile Inversiones said in its report. diary.
And the president of Russia, Vladimir Putin, reaffirmed on Tuesday its determination to continue the war in Ukrainejust a year following the invasion.
Also announced that it will suspend its participation in the New START Arms Control Treatycharging that some in Washington are thinking of resuming nuclear tests.
