After the Federal Reserve said it would raise rates again this year and ahead of a razor-thin Bank of England decision, European stock markets opened lower on Thursday.
Europe stocks slide after Fed hike: In comparison to Wednesday’s closing level, London’s benchmark FTSE 100 index dropped by approximately 0.6 percent to 7,686.62 points.
The Paris CAC 40 fell 1.1 percent to 7,250.01 and Frankfurt’s DAX index dropped about 0.8 percent to 15,663.48 points in the eurozone.
As expected, the Fed kept US interest rates constant on Wednesday at a two-decade high, but added that another boost to combat inflation is probable in 2023, with fewer reductions than anticipated in 2024.
The BoE may increase its benchmark interest rate later on Thursday for the fifteenth consecutive time, but a surprise drop in UK inflation raises the prospect of a pause.
“With the Fed out of the way, attention will now turn to the Bank of England,” Deutsche Bank analysts wrote in a note to clients. Until yesterday morning, the general anticipation had been that the BoE would announce another 25-basis-point increase.
Currently, a rate hike today is being price in by markets at only a 46% probability, and the decision is very close to being finalize.