Last week was one of great losses for the world’s main currencies and large companies such as TeslaAmazon, Facebook and Google, which are listed on the Stock market.
As for those listed on the New York Stock Exchange, the one with the biggest drop was Tesla, the manufacturer of Elon Musk Electric Cars, that in the week fell 8 percent and that since its maximum price of October 31, 2021 accumulates a loss of 50 percent.
amazon it fell 6.7 percent in the week, and so far this year it is down 36 percent. Target (Facebook) it fell 5 percent in the week and 62 percent in the year. Google had a weekly drop in its market value of 3 percent and in the year of 33 percent. microsoft in the week it fell 2.4 percent and in the year 32 percent.
Manzana, the company with the highest stock market value, continues so far as the best freed with a weekly drop of 1.2 percent and 22 percent in the year.
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Netflix, Although in the week it gained 2.3 percent due to the start of its new strategy of lower rates in its services with some advertising spaces, it maintains a sharp drop in its market value of 62 percent in the year.
A few days before the financial results of large companies for the third quarter of the year are released, expectations are not at all favorable for almost none.
Excluding the oil companies and a few exceptions in other sectors, the prospects of lower economic growth and higher interest rates do not favor the results in sales, profits and valuation of the companies.
Cumulative loss of technology companies in the stock market during 2022
The super dollar… for super weak currencies
The worldwide economic uncertainty due to the risks of a global recession, the extension of the inflation and fears of new increases in interest rates led to falls in the parity of the main currencies such as the euro, the pound and the yen.
Faced with scenarios of uncertainty and economic recession, the United States dollar fulfills its historical role as a refuge for investors who do not want to take on greater risks.
Even more so with the increase in interest rates in the United States that make their fixed income securities safer and more profitable options.
What needs to be considered is the magnitude of the negative outlook for the world economy, which is reflected in all-time highs for the dollar.
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And it is that the US dollar maintained its strength and reached in the week its highest comparative value of the last 20 years against the euro and 32 years against the Japanese yen.
The pound For its part, it continued with a sharp drop aggravated by the political problems of the new government of the United Kingdom.
The DXY index. which measures the value of the United States dollar against the euro, the yen, the pound and the Canadian dollar mainly, registered a level of 113 points during the week, a maximum level not seen since mid-2002, that is, a peak in the last 20 years.
The DXY began to be calculated in 1973, after the end of the Bretton Woods Agreements. It started with a base value of 100.
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Its all-time high was 163.83 on March 5, 1985 and its all-time low was 71.58 on April 22, 2008.
After the Covid-19 pandemic began, the lowest DXY index was recorded on May 9, 2021 with a value of 90.3, which means that since then and until last Friday, the United States currency registered an increase in its comparative value of 25 percent.
Europe faces the effects of the Russian invasion of Ukrainethe gas shortage, the historic rise in electricity prices and the risks of higher inflation.
The euro valuelower than that of the dollar since last July, had not had such a low value since 2002.
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The euro began operating on January 1, 1999, replacing 25 European currencies at the time. From that year, only its value was below the dollar from February 2000 to October 2002. It took 20 years for the price of the dollar to equal the euro.
The Japanese yen continued its decline against the dollar and hit a high of 148.86 yen per dollar. His highest level in 32 years.
The rise in interest rates in the United States, which has not been reciprocated in a similar way by the Japanese monetary authorities to avoid a greater drop in economic activity, has meant the need to intervene in the foreign exchange market to avoid a greater fall of the Japanese currency.
Last August, for the first time in the last 24 years, the Japanese government intervened to buy yen and prevent a further decline in its currency.
The dollar and the pound close to another historical milestone
But what has never been seen in the economic history of the world is that a dollar is enough to buy a pound sterling. That is, the value of the United States currency is equal to or greater than that of the British currency.
never: not even first World War, nor in the second, neither after the United States stopped recognizing the Bretton Woods agreements in 1973, nor when the euro began to operate without the pound in 1999, nor when Great Britain left the European Union on January 31, 2020.
The Queen isabel II he never saw that in the value of the coins and bills that bear his face. Will we see it soon? It may be so, especially if the rises in interest rates in the United States continue and the new government of the United Kingdom fails to put together an economic and fiscal plan that manages to alleviate the political crisis that Liz Truss faces.
The uk currency it lost around 2% of its value against the dollar in the week, due to the strong problems in public finances in the United Kingdom and the severe criticism faced by Prime Minister Liz Truss, who even had to reverse her economic plan and that different media questioned his permanence at the head of the government.
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Fighting for her political survival, Liz Truss fired her main ally and reversed course on tax cut plans, trying to prop up financial markets and her poll ratings.
This was more than enough for the GBP/USD index, which measures the value of the pound, to close the week at 1.11. But it fell to a record low of 1.09 on October 12.
So this week will be one of great anticipation in the world’s stock and currency markets.
In the week we will also have the 35th anniversary of Black Monday on October 19, 1985, when the New York Stock Market plummeted 22.6 percent. The second largest drop in the history of Wall Street stocks, after only the 24 percent drop in December 1914 when World War I began.
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