Wall Street breaks a sequence of four weekly gains pending the Jackson Hole meeting |  Financial Journal

Wall Street breaks a sequence of four weekly gains pending the Jackson Hole meeting | Financial Journal

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The growing speculation that the Federal Reserve will have no qualms about tightening financial conditions on an economy that is beginning to show some signs of fragility gained strength this week. This caused Wall Street to halt a string of four weekly earnings amid concerns that are leading investors to take shelter as they await the Jackson Hole symposium.

The Dow Jones fell 0.86%, the S&P 500 fell 1.29% and the Nasdaq Composite shrank 2.01% in the Friday session. In the last five days, the declines were 0.16%, 1.21% and 2.62%, respectively.

The four-week upward streak that the S&P 500 -the market’s benchmark index- had so far had seen a breaking point, when it ran into a deterioration in expectations regarding the Fed and its monetary tightening path.

In fact, the stamp of the week was the minutes of the last meeting of the Fed, published this Wednesday. The record shows that the officials of the monetary entity still did not find enough indications that inflation was slowing down.

“This suggests that dissuading the Fed from raising rates further will take much more than July’s lower-than-expected inflation data, which was largely driven by falling gasoline prices.VanTrust Capital noted in a report.

This Thursday, two voting members of the committee that defines interest rates, the president of the St. Louis Fed, James Bullard, and the president of the Kansas City Fed, Esther George, stressed that the US central bank will continue its path of adjustments until inflation returns to its 2% target.

As the tone”hawkish” persists, hopes are fading that the agency could slow the pace of tightening, in view of a series of reports such as Wednesday’s retail sales, which showed some weakness on the part of consumption.

Short of a policy meeting in August, next week the Jackson Hole symposium will take place, an annual meeting of central bankers, academics and authorities, where the market expects to receive new signals from Fed officials to obtain clarity on the path to follow. The event will take place between August 25 and 27.

Chilean bag

In Chile, the S&P IPSA fell 0.99% to 5,292.84 points. For the second day in a row, the local index was visibly affected by the performance of SQM-B (-3.50%), the stock with the highest weighting within the index.

Despite SQM posting a significant expansion in second-quarter earnings, market expectations led the stock to decline as of Thursday.

For its part, Compañía Sud Americana de Vapores reported this Friday a 186% year-on-year increase in its half-year profits, but pointed out that there is “significant” cost pressure linked above all to higher fuel prices. The stock fell 2.73% on the day.

In this way, the IPSA closed the week with a drop of 1.89%. The good performances of stocks such as Ripley (11.82%) and Security (10.01%) at the top end of the ranking were overshadowed by falls in Vapores (-11.43%) and SQM-B (5.76 %), located on the opposite side.

“We estimate that the market expected a significant rise in the price of SQM-B shares after the results,” Renta4 research manager Guillermo Araya wrote.

“For the same reason, there was a significant percentage of investors who took positions not only through the purchase of shares, but also through simultaneous operations (bets on the rise in the share price),” he added.

Araya explained that “since the price fell by failing to meet the expectations of results (despite being good), these investors have to cover a percentage of the loss, either in cash and immediately, or liquidate shares that they leave as collateral. “.

According to VanTrust Capital, “SQM’s financial report was better than it appears.” Therefore, he said, “SQM-B’s current post-earnings correction in stock offers an attractive entry point and we reiterate its presence in our local recommended portfolio.”

Europe and Asia

Europe’s economic engine has not reached peak of its inflationary spiral. Europeans learned this Friday that German producer prices increased 5.3% in July, far exceeding the Bloomberg estimate of 0.7%, while the annual variation amounts to 37.2%.

The pan-European Stoxx 600 index fell 0.77%. Most sectors closed in the red, in a series led by a 3% decline in both the travel and leisure sub-index and real estate.

Among the local stock markets of the Old Continent, they led the falls the Frankfurt DAX (-1.12%), the Madrid IBEX 35 (-1.09%) and the Paris CAC 40 (-0.94%). London’s FTSE 100 rose a slight 0.11%.

Asian stocks closed little changed. Tokyo’s Nikkei 225 and Hong Kong’s Hang Seng were flat. Mainland China’s CSI 300 fell 0.69%thanks to the industrial and technological sectors.

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