La Jornada: Oil, war and tariffs shake financial markets

The price of oil, which returned to $100 per barrel yesterday, unleashed a wave of selling in financial markets. The S&P 500 alone erased $1 trillion in market value, closing down 1.21 percent on the day.

The escalation of the war conflict in the Middle East reopened the chapter of the risk of a new shock global energy. The fear of a rebound in inflation punished the profitability of sovereign debt, the stock markets and the exchange market, with the exception, mainly, of the dollar.

In addition to the above, the United States, with a view to avoiding international laws and maintaining its tariff policy, will apply tariffs of at least 10 percent starting this Friday to some 60 countries, investigated for forced labor, which would imply repercussions on companies and the economy worldwide.

The season of financial results, as well as the movements in the price of oil and its consequences on monetary policies, took their toll on Wall Street and the Mexican Stock Exchange (BMV).

After the publication of Alphabet’s results, in which a 298 percent increase in profits was announced on Wednesday on the wave of artificial intelligence (AI), while Tesla increased sales 26 percent at the cost of sacrificing profitability, the Nasdaq fell 2.15 percent, to 25,137.69 points; The S&P 500 lost 1.21 percent, to 7,408.10 points, and the Dow Jones fell 0.97 percent, to 51,711.65 points.

Tesla shares plummeted 14.53 percent; Nvidia, 1.59 percent; Intel, 2.46 percent; Alphabet, 6.89 percent; Microsoft, 2.24 percent, and SpaceX, 1.89 percent. For its part, Repsol rose 3.65 percent; Exxon Mobil, 1.58 percent, linked to the increase in oil prices.

The Mexican Stock Exchange (BMV) fell 1.54 percent, to 66,266.01 points. Affected by the fall of Walmart, 2.60 percent; Mexico Group, 2.68 percent; Inbursa, 2.73 percent; Gruma, 3.84 percent; Cemex, 3.02 percent, linked to weak quarterly reports, a drop in metal prices and the effect of risk aversion due to the war in Iran.

Investors, on the other hand, looked at Christine Lagarde, president of the European Central Bank (ECB), after the monetary authority she directs decided, as planned, that interest rates remain at 2.25 percent, as she left the door open to act if necessary.

The dollar showed muscle

The escalation between the United States, Iran and the Houthis raised risks for energy and shipping, boosting oil and increasing global volatility. Meanwhile, demand linked to technological infrastructure and semiconductors faltered.

The peso came under pressure, after considering local reports of inflation and economic activity, in an environment of strength for the US currency and geopolitical uncertainty.

The Mexican currency registered a daily depreciation of 0.73 percent against the US currency, to close at 17.5269 units per dollar spot.

According to data from the Bank of Mexico, the exchange rate operated between a maximum of 17.5370 units and a minimum of 17.5040 units.

Due to tensions between the United States and Iran, the DXY index, which measures the behavior of the dollar against a basket of six international currencies, advanced 0.31 percent, to 101.27 units.

The increase in the price of oil in recent weeks puts pressure on inflation, which punishes the debt market. Rises in bond yields are accelerating. The German bond yield exceeded 3.20 percent, closing at 3.2115 percent. In the United States, the interest rate on the 10-year bond operated at 4.70 percent.