Fears that the Federal Reserve will raise interest rates aggressively and continuously weighed on Wall Street and Europe

Federal Reserve raised its interest rates

Fears that the Federal Reserve will raise interest rates aggressively and continuously weighed on Wall Street and Europe.

The main index of the United States stock market fell Friday on fears that the Federal Reserve of the United States is becoming more hawkish. Wall Street market indexes have lost ground in the last two days, raising market expectations of a recession.

As a consequence of the market turmoil, the losses extend to the European stock market. The majority of European stock markets fell on Friday as the Fed’s aggressive monetary policy remained in place. The German DAX index fell by 1.3% by opening trading hours, the British FTSE 100 fell by 0.7%, and the French CAC 40 declined by 1.2%.

Meanwhile, in the U.S. stock market, Wall Street is edging lower as fears of tightening policy continue. The S&P 500 benchmark fell by 0.8%, and the Nasdaq feature declined by 1.38%, posting its largest decline in the past two weeks. The Dow Jones futures index continued its downward trend, falling 0.17% in another negative session.

The stock market decline implies that investors see a higher possibility that the central banks will raise their interest rates at a rate that is higher than market expectations.

The European stock market is showing signs of resilience and slow recovery, yet its full recovery is determined by the current war between Ukraine and Russia. On top of that, the vast majority of EU countries had agreed to the oil price cut, which was considered an undesirable decision by Russia and its allies. Higher oil prices might affect the European economy’s recovery process by adding extra pressure to living costs and therefore high inflation.

In addition, inflation in the Eurozone is higher, and living costs are climbing to a record high. According to Isabelle Schnabel, the European Central Bank Executive, the EU central banks must act forcefully and aggressively to maintain and prevent a peak in inflation.

Whether in the United States or Europe, investors were hoping to see signs of monetary policy easing. However, it’s too early to stop the interest hikes, according to market experts.

Analysis believes that the best way to prevent a market recession is by implementing the highest and fastest interest rate hikes possible. That indicates that there will be more than five interest rate hikes, at least for this year.

Turning to the last economic power, the Chinese economy China’s recovery is moving faster than expected, and that is the biggest unknown factor for the energy sector. Along with the United States and the European Union, China is the world’s largest economic powerhouse. In terms of energy and oil consumption, China is a fixed player. As a result, its growth is more influenced by the current state of the oil and energy markets.

During the closure period, oil and gas consumption and demand in China dropped significantly. Yet reopening its borders, will bring it back to its pre-pandemic level, which might put enormous pressure on the energy market. Particularly when the international energy sector is already experiencing a short-term decline in oil supply.

Written by Editor

Leave a Reply

Your email address will not be published. Required fields are marked *

American workers

Two of the three main indexes in Wall Street edged lower on Tuesday, Nasdaq jumpers and the Dow falls

Stock futures rise as Wall Street looks to bounce from Monday losses

Wall Street’s main indexes fell ahead of stronger-than-expected inflation data