European and Asian stocks fell on Monday. It was the worst week for global stocks in more than a year. Investors were considering the possibility of a tighter monetary policy of the US Federal Reserve. Shares of tech companies that thrived during the pandemic – fell. Investors continued to move out of the sector because of those concerns; That global central banks will begin to reduce stimulus measures more aggressively by the end of this year.
The Stoxx Europe 600 regional stock index fell 1.3 percent. The technical sub-index was downgraded by 2.3 percent. The UK’s online food delivery businesses Eat and Deliveroo, and Atos had the heaviest drop. The Kospi index decreased 1.5 percent. The Hang Seng Tech Index fell 2.8 percent. Investors are focusing on the prospect that the Federal Reserve will announce more moves this week; At a rate-setting meeting to combat rising inflation.
Goldman Sachs said over the weekend that it expects the Federal Reserve to hint at raising interest rates from a record low in March. The Wall Street Bank also warned customers about the risk; According to which the Federal Open Market Committee wishes to take specific austerity measures at each meeting; Until the picture changes. Futures markets estimate the Fed to raise its benchmark interest rate by more than 1 percent by December; Since it approached zero in March 2020.
US Treasury 10-year benchmark yields based on the price of global debt, at 1.742 percent on Monday, were unchanged. However, it increased slightly from 1.5 percent at the end of last year. While high-interest rates increase borrowing costs for all businesses; They also reduce companies’ projected profits in investor valuation models. The effect is enhanced for tech and other growing companies; Whose maximum profit is not expected in the coming years.
The index of loss-making technical stocks collected by Goldman in the US lost about a fifth of its value. The Tokyo Stock Exchange Mothers Market for High Growing Beginners fell by about 18 percent. Part of the strategists believes that technology stocks were excessive in the pandemic.
The FTSE All-World Stock Index fell more than 4 percent last week, the heaviest drop since October 2020. With a warning about growing subscribers by streaming giant Netflix; Which hinders the start of the quarterly profit season. The Wall Street stocks suffered a decisive blow. The Nasdaq Composite dropped 7.6 percent. On Monday, futures trading suggested that investors start hunting for Wall Street trades. The Nasdaq 100 and the S&P 500 added about 0.5 percent. However, American retail investors were cautious. A poll by the American Association of Individual Investors found that 47 percent were “low” in the week before January 19; Compared to the historical average of 31 percent. The global cryptocurrency market stabilized on Monday. This is after the price of Bitcoin fell to a six-month low on Saturday. Investors left speculative assets.
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