European Stocks Fall as Wall Street Slumps Amid Fed’s Interest Rate Decision

European stocks fell (Thursday), tracking Wall Street, which suffered losses last night, after the Federal Reserve (the US central bank) indicated raising interest rates for a longer period, and before further decisions on interest rates from the Swiss National Bank and the Riksbank. The Central Bank of Norway and the Bank of England.

The Federal Reserve fixed interest rates on Wednesday evening, as was widely expected, and revised expectations for the economy higher, while warning that the battle against inflation is not over yet. The Nasdaq index on Wall Street fell 1.5 percent at the close.

Jerome Powell, head of the central bank, said that officials will continue to hold “meeting after meeting” on interest rates, and “are prepared to raise interest rates further if that is favorable.” Traders reduced their bets on lowering interest rates next year immediately after the decision was issued.

The European Stoxx 600 index fell 0.6 percent by 0709 GMT, with shares of technology companies sensitive to interest rates falling 0.8 percent.

Commodity-related sectors, such as mining and energy, fell more than 1 percent each, leading to early losses as metal and oil prices fell against a stronger dollar.

The British Financial Times 100 index fell 0.5 percent before the Bank of England’s decision on whether to stop a series of interest rate hikes, which began in December 2021 after data on Wednesday showed an unexpected decline in inflation.

In turn, the Japanese Nikkei index closed with a significant decline, as shares of heavy technology companies tracked the impact of their American counterparts. The Nikkei index fell 1.37 percent to 32,571.03 points, its largest daily decline since August 25, with the shares of Advantest, a manufacturer of chip testing equipment, falling 2.65 percent.

The shares of “Tokyo Electron”, which manufactures chip-making equipment, fell 1.09 percent, and the shares of the “Soft Bank” group, which invests in the field of technology, fell 3.17 percent.

The broader Topix index fell 0.94 percent to 2,383.41 points, and the largest national banks limited their losses. Of the 225 stocks listed on the Nikkei index, 54 stocks rose compared to 171 stocks.

For its part, the dollar recorded new high levels against some currencies (Thursday), as it remained near its highest levels against the yen since early November, after the Federal Council showed a tendency to tighten after keeping interest rates unchanged.

The dollar index, which measures the currency’s performance against a basket of currencies, rose to 105.68, its highest level since early March, before falling slightly to 105.55 points.

The Japanese yen was affected by a state of tension after the Federal Reserve meeting, as it hovered around the level of 148.39 against the dollar after touching its lowest level in 10 months at 148.47 earlier in trading.

There are slim chances that the Bank of Japan will tighten policy at its meeting on Friday. The pound sterling was last trading at $1.2319, which is slightly above its lowest level in 10 months against the dollar, ahead of the Bank of England’s decision on the interest rate. The euro recorded $1.0635 after falling to its lowest level in 6 months at $1.0617.

Both the Australian and New Zealand dollars took a hit after the Federal Reserve meeting, with the Australian dollar falling 0.6 percent, and the New Zealand dollar falling 0.3 percent.

2023-09-21 13:26:35
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