Page 16 - Issue-47

ELITE
Vol.1, Issue 47, September 2022 ELITE

Similarly, this can contribute to lower In this perspective, the global stock market
wages; since the labour supply will be has experienced some phases of volatility
greater than the demand. High interest and also indices are starting to contract. It
loans will stop entrepreneurs from was published in “L'écho” on September 21
launching a new project. This reduces that in the United States, Le Dow Jones lost
competition within the market;This lack of 1.70%, Nasdaq fell 1.79% and the S&P 500
competition will have a double effect; fell 1.71%. On Wall Street, high policy rates
Initially, because of market instability, also tend to weigh on equities, especially the
innovation will be more or less reduced. more expensive technology sector.
That is to say, the presence of innovative According to the French magazine “Les
products on the market will be avoided. affaires”, it was published on 22 September
Secondly, there will be no job creation. that in Asia, the Tokyo Stock Exchange
This will always be translated into a closed down 1.36%. In Hong Kong, the Hang
decrease in American production and Seng index also fell by 1.52%. In London, the
productivity; contributing more inflation. FTSE 100 dropped 36.15 points (-0.50%) to
Market of funds 7,201.49 points. In Paris, the CAC 40 yielded
The impact of this increase on “big 70.29 points (-1.17%) to 5,961.04 points. In
financial” was very significant. The largest Frankfurt, the DAX yielded 151.68 points
U.S. banks are expected to record windfall (-1.19%) to 12,615.47 points. This shows us
profits on loans, benefiting from higher that all stock exchanges on a global scale are
Federal Reserve interest rates as they influenced by FED decisions. In other words,
prepare for a potential recession. As the American recession will be exported to
reported in the US magazine “Financial the world because of economic
Times”, analysts expect “JPMorgan globalization.
Chase”, “Bank of America” and Drop of oil prices
“Citigroup”to see growth in net interest Since the United States is a great country
income - the difference between what influencing international prices; its demand
banks pay on deposits and what they earn for oil, due to any event, influences its price.
on loans and other assets. Banks tend to As already mentioned, oil prices were
take advantage of higher rates because declining as a consequence of negative
they are able to increase loan fees faster expectations about the global growth
than they are increasing deposits. The risk outlook. For example, Brent barrel from the
of a growing recession arises in the North Sea for delivery in November lost
context of a slowdown in investment 1.66% to 90.47 dollars. The US West Texas
banking activity, particularly in equity Intermediate (WTI) barrel for delivery in
markets. On average, “JPMorgan”, “BofA”, October fell from 2.13% to $83.90 as
“Citi Group”, “Goldman Sachs” and reported in the French magazine “Le
“Morgan Stanley” are expected to record a Revenu” on September 20. Positive for a
40% drop in investment banking fees, slowdown in prices, oil prices fell by more
according to estimates compiled by than 3%, affected by recession fears. There
Bloomberg. Analysts also predict that the was also a statement from the U.S.
overall revenues of these banks will fall on Department of Energy that the
average by about 4.6% replenishment of U.S. strategic oil reserves is
not likely to begin until late 2023.
Global stock exchanges and oil prices
Global stock exchanges
Global stock exchanges are slowing down
sharply after US inflation. Investors
believe that the FED has no choice but to
raise its rates sharply. They promote high
returns that are not risky, so they put their
money in the bank. Also, some of them
keep their distance from risky investments
Back until they are sure that the FED will raise
Back
interest rates another time; thus they will
To FEPS understand the monetary policy of the 14
To FEPS
To FEPS
FED.