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Wednesday, June 29, 2022

Isaac drops for 25 pc as market for Fed hike

Dublin shares fell for the seventh consecutive session on Tuesday, hitting their lowest level in 12 months.

They dropped the latest drop by another 1.8 percent from the combined value of Iseq 20 and took the decline for the year so far to nearly 25 percent.

Dublin’s top stocks outperformed European counterparts but the trend was similar across the continent.

The continent-wide Stoxx 600 index fell 1.3pc, down 2.4pc on Monday.

Health care and industrial stocks in Europe led regional losses, while battered banks gained 1.1 per cent higher.

Wall Street’s benchmark S&P 500 index confirmed on Monday that it was in a bear market, after losing 20 pc since its record close. Markets are sinking due to rising fears of recession. In the US, which has focused on risk, the Federal Reserve’s aggressive rate hike could propel the economy into recession.

The Fed has moved to tighten monetary policy earlier than the European Central Bank (ECB), with a series of interest rate hikes to tame inflation – which is trending higher in the US than in the euro area. .

Many now expect the Fed to announce a three-quarter-percentage point rate hike today.

“This meeting is on everyone’s radar … and the market will hang on to Fed Chair Jerome Powell’s every word,” said Chris Weston, head of research at Pepperstone Group, a currency broker in Australia. “The market seeks answers on its commitment to reducing inflation.”

While the Fed is expected to take steps to control inflation, interest rate hikes are putting pressure on US debt and threatening to stifle economic growth.

“In our view, the risks of a Fed-induced recession have increased, and the likelihood of a recession over the next six months has increased,” Mark Heifel, chief investment officer at UBS Global Wealth Management, said in a note.

“Historically, during periods when inflation has been above 3 pc, price sectors have outperformed. We support the energy sector and the UK market, which is heavily weighted to the value of the stock.”

Fears of recession spread beyond America.

“If people are concerned about a global recession, the economic engine of Europe, Germany, is a very export-driven economy and that will be a potential problem as well,” said Russ Mold, investment director at AJ Bell.

“There is also a frightening feeling that the European banking system is still not in the best shape and this will be another potential burden on growth.”

As households grew financially, consumer stocks such as Okado and Kingfisher declined 10.8 percent and 4.4 percent, respectively, due to concerns about a higher inflation rate and weaker consumer spending.

Meanwhile, higher interest rates and inflation expectations in the European bond market and the end of the ECB’s QE pushed bond prices down, sending returns, or returns, for bondholders, but toward rising debt costs for sovereigns and companies. pointed to.

additional reporting Reuters

World Nation News Desk
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