Signs of recession are on the rise
US stock exchanges fell earlier in the week
On Wall Street, prices drop significantly at the start of the week. In addition to the war in Ukraine and high inflation, the bond market is also showing signs of a possible recession. In addition to financial values, cryptocurrency prices have lost again, sometimes massively.
Investors are fleeing the US stock market out of fear of a recession. The US blue chip Dow Jones index fell 2.79% Monday to a one-and-a-half-year low of 30,516.74 points. So was the broad S&P 500 and the Nasdaq, which fell 3.88% to 3,749.63 points and 4.6% to 10,288.32 points, respectively.
Investors feared that central banks will have to take more drastic measures to contain inflation, said Stuart Cole, chief economist at brokerage firm Equiti Capital. “Lower growth and a possible recession are increasingly seen as the price for it.” This has been reflected in a development of the bond market. There, at 3.26 percent, two-year government bonds yielded as much as 14 years ago and more than their ten-year counterparts. These are back to 3.155 percent. This phenomenon, called an inverted yield curve, is seen as a harbinger of recession.
Half or three quarters of a percentage point?
Due to continued price pressure, a rate hike of 0.75 percentage points in July is considered certain. Such a big step could also come on Wednesday when the Fed discusses its monetary policy. Investors put the probability of this happening at 25%. They see a 75% chance that the increase will be half a percentage point, as reported. This raised the Dollar index, which tracks rates against major currencies, temporarily fell 0.6% to a high of 105.07 points in 19 and a half years. Financial stocks, on the other hand, have kicked investors out of their portfolios. The actions of Bank of America, Citigroup or JP Morgan it fell to 3.1%.
Falling raw materials
The pessimists were also the majority on the commodity markets. New blocs in parts of the Chinese capital Beijing have fueled further speculation about falling demand. The variety of US crude oil WTI it fell 0.2% to $ 120.87 per barrel (159 liters). The price of industrial metal copper it also dropped one percent to $ 9,352 a ton. Due to the strength of the dollar, the Gold less attractive to investors outside the United States, even the “anti-crisis currency” was unable to escape the downtrend and lost 2.2% to $ 1,830 per troy ounce (31.1 grams).
It went even steeper Bitcoin And Ethereum. With losses of up to 23% at $ 22,590 and a whopping 30% at $ 1165, the two cryptocurrencies are heading towards their largest daily loss since the stock market crash in March 2020. In addition to recession fears, the provider’s woes financial services company Celsius, which specializes in cryptocurrency lending, have investors nervous. “Everything is collapsing in the cryptocurrency world and it will only get worse,” said Neil Wilson, Markets.com chief analyst of online brokerage.
Crypto assets under enormous pressure
In this context, the values of the cryptocurrency sector and the companies dealing with the blockchain technology behind Bitcoin & Co have flown out of the deposits. So the newspapers fell Coinbase, Riot, Marathon And Silvergate up to 15 percent on Wall Street. The titles Microstrategy sometimes it has even dropped by nearly 30 percent, just as it was 20 years ago. The software company has invested billions in Bitcoin. The same goes for the electric car manufacturer Teslawhose shares have lost five percent.