Stock markets were hit by the sell-off on Friday. The heightened expectations that the US Federal Reserve (Fed) will tighten its monetary policy further at the next meeting on September 21, led to pressure for measurements on both sides of the ocean. The president of the Boston’s division of Fed, Eric Rosengren, said that the US economy remained flexible and stable, while slowing global growth continues. These words erased 2.13% and 2.45% respectively of the value for the Dow Jones Industrial Average and S&P 500.
In Europe indices also remained in red territory after Germany’s trade balance disappointed investors. The exports of European largest economy has recorded strong decrease in July, which impacted negatively on the trade surplus for the fourth consecutive month. The German DAX 30 erased 0.95% under the influence and the meeting of the European Central Bank on Thursday. The President Mario Draghi said at the time the program of quantitative easing will remain unchanged, but did not rule out the continued operation after March 2017. This somewhat disappointed investors, who expected clearer signals for action by the institution and continuation of incentives for the Eurozone.
The decline in stock markets was also fueled by the largest nuclear test by North Korea, which supported the JPY. On the one hand, investors boosted the USD on the basis of renewed attitudes to a recent increase in interest rates in the US while on the other hand, the Japanese currency was also profitable, with a view to reducing the tendency of investors to take on riskier positions.
Besides the red session the stock markets, the bond market was also under pressure as the yield on 10-year US bonds rose to a 11-week high. As the growth of US stocks in the summer, which was implemented less than enviable corporate data, but rather of the better views of the US economy compared to the EU, China or Japan had to do.
The USD recorded gains on Friday, against the major rivals as commodity currencies like AUD, CAD and NZD, which retreated against the USD. This came as a result of the decline in oil prices, which despite record declines in reserves, turned to negative territory.
The reduced prospects of cooperation of the main producers of black gold, as well as increased efficiency of current levels led to expected oil to take down again. The week started well with sales, as US light crude lost 1.5% in early trading today after it was recorded increase in oil rigs in the US, and manufacturers adapt to activity at low prices.