Investors’ appetite for stocks and risk currencies declined in light of the expectations of raising interest rates during the coming period. Stock markets witnessed strong fluctuations between high and low, and European markets suffered losses, especially some disappointing economic data.
Economic data releases included fourth-quarter GDP numbers from Germany, France and Spain, Italian inflation data, and the Eurozone business climate survey.
Friday’s preliminary figures showed that the French economy grew 0.7% in the fourth quarter, taking the full-year growth rate to a five-decade high of 7% in 2021 after a contraction of 8% in 2020.
Spanish GDP grew 2% on a quarterly basis, also exceeding consensus expectations and raising annual growth to 5%.
The German economy contracted more than expected in the fourth quarter as renewed Covid-19 measures weighed on activity. Gross domestic product shrank 0.7% on a quarterly basis. Friday’s figures showed that Europe’s largest economy grew by 2.8% in 2021.
The European Commission’s monthly economic sentiment index fell to 112.7 in January from a revised 113.8 in December, as industry and services sentiment ebbed.
Traders’ appetite to invest in equities declined intraday, with the pan-European Stoxx 600 Index down 1.6%, with the auto sector slipping 2.6% to lead the losses and all other sectors were lower except for the travel and leisure sector, which rose 0.5%.
Markets fell throughout the week as investors reacted to the Fed’s indication on Wednesday that it might soon raise interest rates for the first time in more than three years, as well as heightened geopolitical tensions between Russia and the West over Ukraine.
Asia-Pacific markets were mixed during trading on Friday, with Japan’s Nikkei 225 up 2.09% to close at 26717.34 after falling nearly 3% on Thursday, while Topix rose 1.8% at 1876.89. South Korea’s Kospi reversed its losses, rising 1.87% and closing at 2663.34, and the Australian ASX 200 rose 2.19% to end the session at 6,988.1.
Mainland China markets slipped, with the Shanghai Composite down 0.97% to close at 3,361.44, while the Shenzhen component fell 0.53% to 13328.06, and Hong Kong’s Hang Seng fell 1.05% in late afternoon trade.
MSCI’s broadest index of Asia Pacific shares outside Japan rose 0.19%.
In terms of US stocks, it fluctuated greatly between high and low, but it seems that it is heading towards the worst closing week since March 2020, and the Dow Jones Industrial Average rose by about 100 points, or 0.3%. The S&P 500 rose 1%. The Nasdaq Composite Index is up down 1.6%, supported by post-earnings gains from Apple (NASDAQ:AAPL).
Apple shares rose more than 5% after excellent quarterly results, providing some stability in stock indexes.
Yung-Yu Ma, chief investment analyst at BMO Wealth Management, said the big intraday moves point to the challenge the market now faces, which is that financial conditions are tightening.
It seems that the risk appetite for digital currencies has begun to improve, as Bitcoin rose today 3.19% to reach the level of $ 37 thousand again, and the rises affected other currencies as well.
On the commodities front, oil prices rose again, with Brent crude exceeding the level of $91, before falling to $90.7 a barrel at the time of writing the report, amid fears of a supply shortage.