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Shares on both sides of the Atlantic sank on Wednesday as investors waited for minutes on the Federal Reserve as they provided instructions on the timing of crisis support that helped consolidate financial markets.
The Wall Street S&P 500 was about to fall on its third day in a row, after opening 1.3% lower, and the technology-oriented Nasdaq Composite lost 1.4 percent.
The fall had a weak session in Europe, with Stoxx 600 per cent falling 1.9 per cent across the region in mid-afternoon trading in London, close to the biggest reference day slide this year.
The moves came just minutes after the last monthly meeting of the U.S. Federal Reserve.
Luca Paolini, chief strategist at Pictet Asset Management, said investors would study the minutes as the world’s most influential money makers thought they could reduce their $ 120 billion a month purchase of shares as they helped boost stock valuations and keep the government bond cap. benefits.
Jay Powell holds the Chair of Faith he insisted the bank will maintain its ultra-adaptive stance until the U.S. labor market recovers from the pandemic.
“[But] The Fed can’t be sidelined forever, ”Paolini said.“ The risk is that the markets will really start to see themselves behind the curve, ”and then fear“ a terrible panic that is too late.
The yield on the U.S. 10-year Treasury bond, which rose from about 0.9 percent earlier this year, fell 0.01 percentage points to 1.63 percent on Wednesday.
Paul Jackson, head of asset allocation research at Invesco, said investors are looking for an excuse to consolidate profits after the stock market rally that began in March last year and the corporate season on both sides of the Atlantic.
The European Stoxx 600 has risen about 55 percent since mid-March 2020 and the S&P 500 on Wall Street has gained more than 80 percent.
“There’s already a lot of good news on the price, and it’s harder to see where the next catalyst for a rally is coming from,” Jackson said.
Another concern was “global growth that is sufficient to achieve more inflation and eliminate support from central banks,” he added. The main consumer price inflation in the US was 4.2 per cent in April compared to the same month last year – the largest increase since 2008.
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Inflation that erodes the real return on stocks and bonds “is now a problem in the euro area as well,” said Maya Bhandari, portfolio manager at Columbia Threadneedle, after factory activity and retail sales boomed in April. The European Central Bank last week raised growth and inflation expectations for the bloc, as a stage for further discussion on whether the pandemic-induced bond buying pace should slow down.
In currency, the pound fell 0.3 percent to $ 1.414 and the flat euro was $ 1.221. Meanwhile, the green card went up against the equal basket, rising 0.1 percent.
Brent global crude oil, which touched $ 70 a barrel on Tuesday for the third time in a pandemic on Tuesday, fell 3.6 percent to $ 66.26 a barrel.
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