At the close of Friday, the Dow Jones recorded its fourth negative day with a decrease of 1.62%, reaching a level of 29,590.41 points, its lowest level since November 2020. The S&P 500 ended with a price of 3,693.23 units and a negative variation of 1.72%, while the Nasdaq fell 1.80% to end at 10,867.93 points, both indices recorded their worst level since last June.
In the weekly balance, the Dow Jones, S&P 500 and the Nasdaq decreased 3.99, 4.65 and 5.07%, respectively, which meant their worst variation for the same period since the second Friday of June.
Mexico’s indices followed the same trend as the global market. The S&P/BMV IPC ended at 45,401.14 points and a drop of 1.99%, while the FTSE BIVA closed down 1.98% at 949.62 units. For the weekly close, drops of 2.93 and 2.44%, respectively, were recorded.
“Market anxiety remained high as investors continue to process the implications of a week of tightening by central banks around the world and rising bond yields that are putting pressure on valuations. The S&P 500 retested its June low and European stocks fell sharply after weak eurozone data and a new UK economic plan added to inflation concerns,” said analysts at consultancy Edward Jones. .
In Europe, the UK government announced a tax cut plan to boost economic growth, sending the pound to 35-year lows. Among the incentives, he highlighted the cancellation of the increase in the tax on corporate profits from 19 to 25%. Following the announcement, eurozone stocks closed negative, with the FTSE 100 index falling 2.13%, the DAX down 2.46%; the Euro Stoxx 50, 2.49%; the CAC 40, 2.18% and the IBEX 35 lost 2.71%.
Analysts have mentioned that going into the last quarter of the year, they believe that inflation will be the main factor that will determine the direction of travel of the markets. Expectations have priced in a considerable amount of recession fears and what we saw today is likely to be closer to a bottoming out process.
“Every time we get a better-than-expected economic reading, traders anticipate that that will allow the Fed to be even more aggressive with policy tightening. A hard landing is becoming the base case for many and that means more economic trouble ahead along with a much weaker stock market,” said Edward Moya, Senior Analyst at OANDA.