2023-05-05 16:40:15
AFrom school, the break is known as an institution that is not insignificant for the communication between the students – this week, however, the word “pause” was the focus of the financial markets for once.
ECB President Christine Lagarde in Frankfurt and Fed Chair Jerome Powell in Washington lectured on the break, each in their own way. It was about whether their central bank would now take a break, what a break for a central bank even is – and whether a break in a cycle of interest rate hikes can be expected with a similar reliability as after an agonizingly long lesson.
If you start earlier, you take a break earlier
Investors in the financial markets pricked up their ears, as if students were waiting for the gong. At least in the short term, the stock exchanges consider it gratifying when the central banks interrupt their activities to raise key interest rates.
Although both central banks now hiked their interest rates by the same rate of 0.25 percentage points, the messages regarding possible pauses in Frankfurt and Washington were quite different. While the Fed had been expected to take a break sooner because it had started sooner, as you would expect any working person to, the ECB had yet to say it needed a break at all.
In any case, ECB President Lagarde has now emphasized that her central bank is not yet taking a break – while Fed Chairman Powell has announced one, but is still conditional on its occurrence.
With losses in the weekend break
In the face of so much pausology, investors in the financial markets were torn. Was the announcement of a future pause in America now more important than the lack of a pause this week – or rather did the theoretical possibility of the announced future pause being left open by the central bank ended up beating both?
In any case, investors didn’t rush into the stocks in the past week like the schoolchildren did when the bell sounded in the schoolyard. At best, some analysts interpreted the sharp rise in the price of gold as a kind of break party.
The leading American index Dow Jones lost 2.9 percent on a weekly basis, the Dax, which had risen just above the 16,000 point mark before the break talks, went into the weekend with a weekly loss of 1.1 percent. In any case, for the stock market, that much is certain, there will be a two-day break for the time being.
#week #focus #break