EconomyMarkets fall on fears that an economic recession is...

Markets fall on fears that an economic recession is approaching

Wall Street started the week lower as investors await the Kansas City Fed’s annual Economic Policy Symposium in Jackson Hole, where the Fed could provide more details on the future of its economic policy.

At mid-day, the Dow Jones falls 1.28% to settle at 33,276.70 units, the S&P 500 decreases by 1.60%, to 4,160.92 units, while the Nasdaq registers a fall of 2.07% to settle at 12,442.36 points. If the same trend continues, the Dow Jones and the S&P 500 would close with their worst daily performance in two months.

“US stocks look lower, extending the losses of recent weeks as investors adopt a more defensive tone ahead of a big week for the Fed,” Investrade analysts said.

Added to this is the rise in inflation, which is at record levels, along with the energy crisis in Europe, after the financial group Citigroup said in a statement in a morning that UK inflation is at on track to top 18% for the first time in nearly half a century next year as energy prices soar.

In Mexico, the S&P/BMV IPC fell 0.30% to settle at 48,315.94 points, while the FTSE BIVA traded at 996.82 units, down 0.99%.

Investors remain unsure how aggressively the Federal Reserve will need to raise interest rates to curb inflation. For weeks, many investors had felt confident that inflation had possibly peaked and that the central bank would soften the magnitude of its rate hikes.

Later this week, Fed Chairman Jerome Powell will be speaking ahead of his Jackson Hole meeting as will other officials, so he will be in the spotlight for the possibility of aggressive rates continuing as on Thursday, Federal Reserve Bank of St. Louis President James Bullard said he would lean toward a 0.75 basis point hike in September.

“The stock markets worldwide show negative movements, after starting the week with little economic information, but with greater attention to the end of the week where Jerome Powell’s speech that will be given in Jackson Hole will take on greater weight,” said Monex analysts. .

The fear of the market is visible in the volatility index (VIX), also known as the fear index, which this Monday registers a rise of 13.59% when operating at 23.4 points, they are located as the highest level of the index in almost three weeks and its greatest variation since June 13.

The peso starts with a slight appreciation

This Monday, the peso began the day with an appreciation against the dollar in the expectation that the Federal Reserve will continue to raise its interest rate to face high inflation.

According to data from Bloomberg and the Bank of Mexico (Banxico), the Mexican currency is trading at 20.1420 pesos per dollar, which means an appreciation of 0.32% compared to Friday, by continuing with that trend the peso would break a depreciation rally of five days.

“The Mexican peso begins the week at levels close to the close of Friday, awaiting the start of the Jackson Hole monetary policy symposium, which begins next Thursday, August 25, as well as assimilating the new cuts to reference interest rates in China,” CI Bank analysts said.

How would the elimination of daylight saving time affect the markets?

The elimination of summer time in Mexico does not affect the operations of the stock market, since the Stock Exchanges adjust their hours, opening and closing at the same time as the US Stock Exchange.

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