Jerome Powell reassures world stock markets worried about bond rates

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Global stock markets closed in disarray on Tuesday, split between concerns about rising bond rates and rather reassuring comments from US Central Bank (Fed) President Jerome Powell.

The New York Stock Exchange ended without a clear direction, the Dow Jones (+ 0.05%) and the S&P 500 (+ 0.13%) grabbing a few points, while the Nasdaq fell 0.50%, nonetheless erasing much of his daily losses. In Europe, the Paris Bourse finally managed to secure some gains (+ 0.22%), like that of London (+ 0.21%), but Frankfurt and Milan lost 0.61% and 0 respectively. ,30%. In Asia, the Tokyo Stock Exchange remained closed on Tuesday due to a public holiday but Shanghai closed down 0.17% and Hong Kong rose 1.03%.

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As in recent days, the market’s attention has focused on the rise in bond yields, which distracts investors from certain stocks, particularly technological ones. Indeed, the good stock market health of these companies for almost a year has largely been based on their growth prospects and their ability to invest large sums to develop.

“The pace of the increase in yields may have given the impression that this could have an influence on monetary policy” of the Federal Reserve, explains Art Hogan of National.

Maintaining the Fed’s accommodative economic support policy

But while European and US 10-year bond yields started the session higher, they all declined shortly after US Central Bank President Jerome Powell spoke to the US Senate Banking Committee. Long awaited by investors, the speech of the President of the Fed has, like the words of the President of the ECB Christine Lagarde the day before, made it possible to calm things down a little on the bond markets, slowing down the rise in sovereign borrowing rates. .

The Fed will maintain its accommodative policy of supporting the economy: interest rates almost zero and asset purchases of up to $ 120 billion per month to avoid a drying up of credit.

Read more: The US labor market “very far” from being solid, warns the Fed

Low rates maintained as long as inflation does not exceed 2% for a long time and the US economy is close to full employment, Jerome Powell said on Tuesday. There is still a “long way” before we can see significant progress in the labor market, he said, adding that vaccinations should “accelerate” the economic recovery offering “hope for a return to better conditions. normal this year ”.

Major US technology stocks plunged before recovering: Apple (-3.5%), Amazon (-6%) and Alphabet (-1.5%) ended up close to equilibrium. Tesla, on the other hand, fell 2.19%, suffering from the sharp drop in bitcoin on Tuesday as the electric vehicle maker recently invested $ 1.5 billion in cryptocurrency.