New York (awp/afp) – Western markets retreated on Thursday, affected by the confusing situation in the Middle East and rising oil prices, with the tech sector suffering particularly.
All European indices ended in the red, with Frankfurt (-1.50%) seeing the biggest decline, followed by London (-1.33%), Paris (-0.98%), and Milan (-0.71%). In Zurich, the SMI closed down by 0.60%.
On Wall Street, the Dow Jones closed down by 1.01%, the S&P 500 by 1.74%, but it was the Nasdaq, rich in technology stocks, which suffered the most, sliding by 2.38%.
“It’s a combination of factors,” said Kim Forrest, chief investment officer at Bokeh Capital Partners.
The war in the Middle East “is making investors very nervous,” she explained.
Confusion continues concerning the contacts between the United States and Iran in an attempt to end the ongoing conflict between them.
The White House special envoy, Steve Witkoff, reported “strong signals” indicating a possible agreement, confirming that a 15-point plan for a cessation of hostilities had been submitted to Tehran.
However, media reports have highlighted critical comments from Iranian officials regarding the plan, deeming it imbalanced.
This lack of concrete progress and the prospect of a prolonged war, which is nearing its first month, boosted oil prices, further darkening the mood in New York.
The American West Texas Intermediate (WTI) barrel for May delivery closed with a 4.61% increase at $94.48.
As for the Brent barrel from the North Sea for the same month, it rose by 5.66% in the session, ending at $108.01, edging closer to $110 for the first time since Monday’s drop.
“With each session where the oil price remains above $100, the sentiment on the stock market deteriorates. The risk of stagflation is constantly increasing and could lead to a recession, especially in Europe,” said Andreas Lipkow from CMC Markets.
“We are in a market that continues to show more caution, but we are far from a scenario of panic and investor capitulation. We are not looking at a scenario that forecasts a recession,” noted Amélie Derambure, a portfolio manager at Amundi.
“Overall, what is interesting is that a large majority of investors still believe that the war will be over before the end of April,” she added.
Meta vision
The Californian group, which dropped by 7.96% in the session, has just experienced two major convictions within two days in lawsuits challenging the fundamental structure of its social networks and their impact on young users.
These two judgments set a precedent that could influence the hundreds of ongoing lawsuits against Meta on similar grounds, putting the company under financial and public opinion pressure.
Subsequently, other social network operators, Reddit (-8.85%) and Snap (-10.69%), also plummeted.
Google was also convicted on Wednesday by a Los Angeles court for its management of YouTube, but its diversified model allowed its parent company to limit the damage (-3.06%).
The tech sector was also weighed down by the plummeting memory chip manufacturers, following the presentation on Tuesday of a new algorithm that would reduce memory needs by more than 80% for the use of large artificial intelligence models.
On Thursday, major American names in this sector like Micron (-6.97%), Sandisk (-11.02%), or Western Digital (-7.70%) remained significantly in the red.
Gold under pressure
The price of gold dropped below $4,500, about $1,000 lower than the peaks reached at the end of January.
At 9:30 PM GMT, the price of gold was $4,376.11, down by 2.88%.
“We had a lot of retail investors who bought gold in a short-term profit dynamic. They have massively exited these investments since the outbreak of the conflict. They have pulled down the gold market,” explained Amélie Derambure from Amundi.
Rising government borrowing rates
A sign of concern, the ten-year interest rates on state debt rose on Thursday.
A reference in Germany, the German Bund rate crossed the 3% mark, reaching 3.07% compared to 2.95% the previous day. Its French equivalent flirted with 3.80%, against 3.65% on Wednesday.
The rate of the U.S. Treasury notes for ten years stood at 4.41%, against 4.30% the day before.
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