Global outlook due to severe market tension

The dollar started the week higher and returned to above $4,000, as a result of the tension arising from the US Federal Reserve’s decision to raise interest rates at a time when inflation has reached historic levels.

And in yesterday’s session, the price of a barrel of Brent oil was a reference
For Colombia, it also showed volatility, closing this Monday at $122.08; While WTI stood at $120.77.

For the economist Julio Cesar Alonso, director of the Center
In Icesi Economic Research, the increase in the currency is due to international factors such as what is expected from the Federal Reserve, which could raise the interest rate, making it more attractive to invest in that country. As a result, the demand for dollars increases rapidly.

It is worth noting that the dollar is the currency that acts as a haven for investors in times of uncertainty and this is why at this time, “when we see more Chinese cities closed due to the Corona virus, uncertainty is generated and therefore there are more investors. They are looking for dollars in the world “.

Another factor is related to the Russian invasion of Ukraine, as it puts pressure on food prices and, accordingly, increases inflation.

Because of this international scenario, analysts have reviewed
The downward outlook for economic growth in developed countries as a result of uncertainty.

The US currency rose by 100 pesos on Monday, bringing it to $4,016.50. Analysts say the dollar will continue to rise.

At the local level, that is, in Colombia, there is also a great deal of uncertainty
By electoral competition, given that investors have postponed their decisions while they wait to know the name of the future president of Colombia.

I think the dollar will remain volatile and will remain so in the short term
Alonso said. On Monday, the opening price of the US currency set by the Set-FX platform was $4,010, while the high and low reached $4,041.90.
$3,965.59. During the day, 1,306.9 million USD were traded through 2,440 trades.

Also Read: Bitcoin Drops Below $25,000, 18-Month Low

Other analysts agreed that the US currency opened up less than a week before the second round of Colombia’s presidential election; And in a move in line with the international panorama, taking into account the annual figure of 8.6% inflation in May in the US, which puts pressure on further Fed rate increases and raises the risks of a recession.

Stock market

US stocks fell sharply in early trading this week, pushing the S&P 500 index back into bear market territory. The Dow Jones Industrial Average fell more than 800 points, or 2.3%, while the S&P 500 was down 3% and the heavy Nasdaq Composite fell 3.6%.

European shares fell to their lowest level since early
March, as investors were concerned that rising inflation could lead to further monetary tightening, raising the risk of a recession.

S&P 500 futures fell 2.1% with the underlying index
Near a bear market. US 10-year Treasury yields rose to 3.28%, the highest level since May 2011, as the sell-off of European government bonds accelerated.

8.6 percent goes to inflation in the US, a number that has worried investors.

European stocks were sold off this year on fears that central banks could cause economies to shrink as they tighten policy to curb rising prices.

The Stoxx Europe 600 fell to its lowest level in a month last week as the European Central Bank set a slightly more aggressive course than economists had expected.

“The problem with risk assets is that they are in a dilemma, and we have to choose between two bad options,” Max Kettner, senior multi-asset analyst at Hsbc, told Bloomberg. If inflation stays high for longer then central banks need to do more, which is bad for valuations, and ultimately bad for risky assets. On the other hand, if growth decreases by more than

    the oil

    A barrel of Brent oil, the benchmark for Colombia, rose by 0.06% and
    amounted to $122.08; While the West Texas Intermediate (WTI) rose 0.08% and closed at $120.77.

    “Prices are exacerbating the market amid warnings of a ‘vicious’ spread of the Covid virus in Beijing, which casts doubt on the immediate recovery in demand,” BVM oil trader Tamas Varga told Reuters.

    Concerns about further interest rate hikes, exacerbated by inflation data from the US, also pushed oil prices lower and weighed on financial markets.

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