Consistently high inflation in the US surprised investors
In the United States, inflation has begun to ease, but at a slower pace than the market anticipated. Although inflation fell for the third consecutive month in August, the confirmation of an annual CPI of 8.3% shook markets as it indicates that the Federal Reserve will have to resort to a more aggressive rate policy to dominate prices. of the economy of that country.
Wall Street falls sharply this Tuesday and the Nasdaq, which brings together the major tech companies, depreciated nearly 4% mid-session. The Dow Jones Index fell 2.72%; while the S&P 500 lost more than 3%.
This headwind is hitting Argentine assets, which had just begun a week of recovery. With the collapse of the New York stock exchange, the shares of Argentine companies listed on that market also falter: the hardest hit is Despegar’s card, which sank by 5.8%. The online travel agency accumulates losses of more than 2% so far. Tech companies are more sensitive to interest rate adjustments.
After midday the only ADR remaining in positive territory was that of YPF, which gained just 0.8%. The state-owned oil company is doing well: its share price has gained 85% in dollars since the start of 2022, making it the clear winner of ADRs.
In the debt sector, despite the relative financial calm reached in recent days, bonds are also affected by the fear of a Fed rate hike. , 6%, as in the case of Bonar 2035.
Ultimately, stocks have accumulated improvements since the beginning of September, thanks to the soybean dollar’s rise and support from US Economy Minister Sergio Massa. Bonar 2035, to cite an example, rebounds by more than 5% this month. A
PPI analysts explain: “Is it the end of the recovery of sovereign debt? The performance of the Argentine Globals cannot be separated from the emerging trend. The latter, in fact, explains 70.9% of the decline in Argentine stocks from the debt restructuring occurred (almost two years ago). It remains to await its reaction to this unfavorable inflation indicator “
How inflation affects the markets
“The Consumer Price Index (CPI) report was unequivocally negative for equity markets. A higher-than-expected ratio means we will receive continued political pressure from the Fed through rate hikes,” said the company’s research director. Janus Henderson Investors, Matt Peron, quoted by the CNBC channel.
US Federal Reserve (Fed) chairman Jerome Powell has repeatedly insisted on his commitment to continue raising interest rates, currently between 2.25% and 2.5%, for as long as it takes to reduce inflation.
Investors also await Thursday’s retail sales and industrial production reports which will complete the snapshot of the economic situation ahead of the next Fed meeting.
This idea that we’re about to come to a soft (inflation) landing is becoming less and less likely, Matt Forester, Lockwood Advisors chief investment officer at BNY Mellon Pershing, told the Wall Street Journal.
Ana Chiara Pedotti
Source: Clarin
