The stock market was declining in the United States about an hour after the Helsinki Stock Exchange was closed. State bond prices have been rising today, which has increased towards the evening.
The S&P 500 share index following the price development of five hundred US company shares was 2.0 % lower compared to yesterday’s decision, compared with a decline of 0.5 % at the start of trading.
Nasdaq, which emphasizes the shares of technology companies, was 2.6 % and the Dow Jones, followed by thirty companies, was 1.7 %.
Dow Jones’ toughest counter was Amazon With a $ 4.3 percent invoice to $ 192.71. Other skiers were, for example Microsoftthat flicked 3.2 percent of the red reading in $ 378.19, as well as Apple With a $ 2.3 percent invoice at $ 218.76.
State bond prices were rising sharply. The US interest rate on the United States’s ten -year loan was 10.4 with an interest rate decline at 4.255 % and the two -year -old was 8.2 with an interest rate drop by 3.908 %.
As market interest rates decline, loans prices will increase.
Also in Europe, market interest rates on government bonds fell. In the past, prices rising was not as strong.
The interest rate rises, the price drops
Market interest (Current Yield): Describe a yearly return. As the price of the loan paper decreases, the market interest rate rises, as the price rises the interest rate decreases.
Bond: An investor buys a $ 1,000 loan paper with a 2.0 % annual coupon rate. The market interest rate is (20/1000) 2.0 %.
The price rises, the interest rate drops: The investor sells the loan to another investor for EUR 1,100, ie the price rises. The new investor’s return is no longer 2.0 % because he bought the loan at a more expensive but receives the same coupon rate. The new market interest rate (20/1100) is approximately 1.8 %.
Recession fears
Today, recent macroeconomic figures were obtained from the United States. Basic inflation was a bit harder than expectations, which does not give the US Central Bank Fed a backrest for decrease in control interest rates.
As the control interest rates decline in the future, loans that are issued in the future are paid more moderate interest than the loans on the go. If macroeconomic data provides support for interest rates, current loans prices could be imagined to rise.
Today, loans prices are rising, even though the control interest rates were not supported by inflation figures. Shouldn’t reactions be the opposite?
“Based on inflation figures, but at the same time, private consumption figures were a bit softer than expected,” Nordea swallow Jan from Gerich comment on Kauppalehti.
Private consumption increased by 0.4 per cent in February, compared to 0.5 %. At the same time, data was corrected from January: private consumption fell by 0.3 per cent, compared with previous figures by 0.2 %.
“The market is worried in which direction the US economy is going. There are fears of recession, and this is the key to this,” Von Gerich analyzes.
“The Day of Liberation”
Stock broker eToron analyst Bret Kenwell commented to Bloomberg news agency that the biggest concern would be a scenario where inflation would remain at a high level and economic growth poorly.
“This risk is not the most important at the moment, but all things that strengthen it can weigh the mood of investors,” Kenwell comments, stating that it is still too early to paint such a scenario.
This week, it was heard that the US GDP increased by 2.4 per cent in October -December last year, while the median of economists’ forecasts expected 2.3 percent. In the former quarter, growth generated 3.1 %.
President Donald Trump The influence of customs on the US economy has been the key topic of market commentators. Customs may be expected to increase prices as product imports from abroad are increasing.
This week, Trump announced that it would set 25 % duty for cars and car parts from abroad. The president has said that he will tell about the coming Wednesday, April 2, next week. He has tituulene the day “for the day of liberation.”