Global stock markets slid Friday on worries that an expected ground invasion of Gaza by Israel would spark a wider conflict in the Middle East.
Wall Street stocks declined Friday, as investors looked to lower their risk going into the weekend.
The Dow Jones Industrial Average lost 0.9 percent, while the S&P and Nasdaq indexes fell over one percent.
The yield on the 10-year US Treasury, which briefly rose this week to levels not seen since 2007 amid concerns the Fed is entering a long period of high-interest rates, slipped slightly.
Regina Capital Development Corp. managing director Luis Limlingan added the Federal Reserve has been raising its benchmark lending rate to cool demand and bring down stubborn inflation, with some success. Nevertheless, rates remain stuck above their long-term target of two percent.
Local shares ended the week in the red as investors turned more cautious following Fitch Group’s statement that inflation will likely stay elevated for an extended period, Limlingan added.
Additionally, the recent statement by Fed Chairperson Jerome Powell “weighed on the local and global markets,” the RCDC executive said.
He quoted Powell as saying inflation remains too high and lower economic growth will likely be needed to bring it down. Powell also said he doesn’t think rates are too high now.
At the same time, markets are warily eyeing ongoing conflict in the Middle East, for signs it could spread to other countries.
“Going into the weekend there is a downward trend as short-term investors try to square positions,” Jack Ablin, Cresset Capital’s chief investment officer, said.
“There is an unwillingness from certain investors (to) hold risk positions over the weekend,” he added.
Major stock markets in Europe closed down more than one percent, while those in Asia also saw declines.
Double geopolitical whammy
The US Federal Reserve warned that the recent attack on Israel and the ongoing Ukraine conflict could cause harm to the world economy and boost global inflation.
Hamas carried out a deadly attack on Israel from the Gaza Strip on 7 October and killed at least 1,400 people, mostly civilians who were shot, mutilated, or burned to death, according to Israeli officials.
“The attack on Israel, in conjunction with Russia’s ongoing war against Ukraine, has ratcheted up geopolitical tensions,” the Fed said in its semi-annual report on financial stability.
with AFP