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Markets slump in a crucial week for dealing with debt…

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Barcelona, ​​​​​​​​​​Spain – The fallout from measures that will allow the United States to increase spending and thereby pay down its debt is reverberating through markets, prompting caution over riskier positions. The minutes of the last meeting of the Federal Open Market Committee (FOMC) of the Federal Reserve (Fed) also stand on the weekly agenda.

This morning, index futures were in the red: they tried, without much conviction, to move into positive territory, but fell again. In Europe, the main indicators fell back a few minutes ago.

In Asia, stocks closed higher, helped by signs from Joe Biden that relations with China were on the mend. Hong Kong shares led the gains, with the Hang Seng Index rising more than 1%, led by technology companies. The market also took advantage of the recent weekly declines in the Asian market to look for bargains.

In the debt market, the 10-year US Treasury bond was improving its nominal value, with a premium falling to 3.664% per annum. Oil and gold traded with great volatility, changing sign throughout this morning. Bitcoin was already back at US$ 26,774 at 7:22 am, New York time.

As a highlight in the corporate arena, Meta Platforms Inc. (GOAL), the owner of Facebook, has been fined a record €1.2 billion ($1.3 billion) by the European Union for data privacy violations and will have to meet a deadline to stop sending European users’ data to the United States.

European regulators say the group failed to protect Europeans’ personal information from the prying eyes of US security services. In the morning, before opening the bags, Meta shares were down 1.3% at $242.58.

→ The factors that guide the markets:

🧪 Market catalyst. This week will be loaded with indicators and interventions from the members of the central banks. Investors will, therefore, be attentive to signs that could affect the Fed’s monetary policy decision. Among the macroeconomic references, the most important one comes on Friday with the US private consumption deflator (PCE).

⏳ US debt crisis. There is one week left for US debt to mature. Time is running out and the country is still immersed in the debates regarding whether or not to extend the public spending ceiling. Speaker of the House Kevin McCarthy and President Joe Biden They are scheduled to meet today to resume discussions. An agreement would have to be reached as soon as possible, given that it could take days for lawmakers to approve it. Stocks are likely to fall if the country does not raise the debt limit and slow down on government commitments.

Treasury Secretary Janet Yellen said on Sunday that the chances of the US being able to pay all its bills by mid-June are “pretty low”, underscoring the urgency of the situation.

🫱🏻‍🫲🏽 Positive news… As he tries to restore order to his country’s credit situation, Joe Biden said he hopes ties with China will improve “very soon” after a disagreement over spy balloons earlier this year that damaged diplomatic relations.

🟠 …who lost his elder soon. The US President’s comments came before another chapter in the semiconductor war between the two countries came to light. China announced yesterday that it had discovered cyber security risks in Micron Technology Inc.’s products. and warned against using those components. The technology sector is a major national security battleground between the world’s two largest economies.

🫴🏻 Stimulus for the economy. China kept its interest rates unchanged (3.65% per annum for 12-month loans and 4.30% for five-year maturities). It also cut the RRR, the amount of cash banks must hold in reserve, by 0.25 percentage points. With these measures, the Asian giant wants to boost market sentiment and support credit for the future.

😔 Ode to disappointment. Morgan Stanley strategist Michael Wilson, considered to be one of the worst voices on Wall Street, has warned investors not to think that the rally in US stocks is the start of a new bull market. According to him, there is a lot of evidence, both fundamental and technical, that points to future market problems. He is urging his clients not to get carried away by the latest bullish rally, which sent the S&P 500 briefly above 4,200 points last week, the highest level since August 2022.

🛫 Making up for lost time. Ireland’s Ryanair, which has established itself as an icon among low-cost airlines over the past three decades, has delivered a shocking message to its customers: the era of ultra-cheap fares may be over. That’s after it today announced a near-record after-tax profit of €1.43 billion (US$1.5 billion) in the fiscal year ended March 31. A year earlier, the company had posted losses of €355 million. Ticket prices are rising across the sector. The reasons: strong demand for summer travel, rising energy costs and a shortage of planes as airlines work to renew their fleets.

📴 Programming has been interrupted. Instagram, a social network owned by Meta Platforms Inc, suffered a blackout Sunday night in the United States, with thousands of users reporting that they could not access the service, according to logs from monitoring site Downdetector. This is the second widespread cut in just over two months.

🢢 Stock markets on Friday (05/19): Dow Jones Industrials (-0.33%), S&P 500 (-0.14%), Nasdaq Composite (-0.34%), Stoxx 600 (+0.66%)

In the United States, even Jerome Powell’s remarks that interest rates may rise less or stop rising due to the credit effects of the banking crisis did not prevent a losing day.

Investors’ agenda

Here are the events scheduled for today:

• USA: There are no relevant events planned

Europe: Consumer Confidence/May, Construction Sector Production/March); Portugal (Current Accounts/March)

Asia: Hong Kong (CPI/Apr)

Latin America: Brazil (Focus Newsletter); Argentina (Budget Balance/April)

central bank: Fed (Statements by James Bullard, Raphael Bostic and Thomas Barkin); BCE (Luis de Guindos, François Villeroy and Robert Holzmann, Philip Lane)

balances of the day: Zoom, Ryanair

🗓️ Highlights of the week →

(With information from Bloomberg News)

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