(AFP)-NEW YORK (AFP)- On Wednesday, fears of a recession sent the price of Brent oil briefly back below $100, and the euro got closer to being the same value as the dollar.
European stocks went up again because bond yields went down and people looked for deals. US stocks also went up because the Federal Reserve minutes kept a tough stance on inflation.
In afternoon trades, Brent North Sea, which is Europe’s benchmark crude oil contract, briefly fell below $100 per barrel in afternoon trades, just like the US benchmark WTI did on Tuesday.
Citi analysts think that Brent could reach $65 later this year if the global economy stays weak for a long time.
Also, the euro fell to a new 20-year low of under $1.02. This means that the European single currency is getting closer and closer to being worth the same as the dollar. This is because traders are worried about a recession in the eurozone and the fact that the ECB is raising interest rates more slowly than the US Fed.
“A drop in government bond yields has made it easier for people looking for deals to buy European stocks,” said David Madden, a market analyst at Equiti Capital.
Stocks in Paris went up 2%, while stocks in Frankfurt went up 1.6%.
Chris Beauchamp, the chief market analyst at the online trading platform IG, said, “The mood remains hot.”
“The drop in the euro and the weakness in yields show that investors are still very worried about the future of the global economy,” he said. “Investors may not be able to keep looking for deals in stocks,” he added.
Even though UK Prime Minister Boris Johnson’s government was shaken by dozens of resignations after a scandal, London’s main stock market index, the FTSE 100, went up by 1.2%.
But the pro-government Daily Mail and The Sun, as well as other news outlets, said that Johnson had refused to leave when they asked him to.
Neil Wilson, an analyst at Markets.com, said, “Political risks don’t seem to be having a big effect on UK assets.”
“There are too many bigger problems to worry about right now, like inflation, a slowing economy, and strikes.”
Britain is in the middle of a nationwide strike, especially in the transportation sector, because wages are falling because inflation is going up so fast.
Later, Wall Street stocks also went up because Fed policymakers said in minutes about the big interest rate hike in June that they were ready to keep raising interest rates to keep price pressures down.
Investors were happy with the Fed’s tough stance on inflation, according to people who follow the market. However, Briefing.com analyst Patrick O’Hare pointed out that the Fed’s stance was just a restatement of what it had said in recent statements.
“It’s mostly because the first half of the year was so bad,” O’Hare said of Wednesday’s gains. “In June, we sold so much more than we could handle. The market just needs a little bit of good news. “
Elsewhere On Wednesday, most Asian stock markets closed down because of a new wave of coronavirus cases in parts of China. As part of the government’s “zero-COVID” policy, some cities were locked down.
