An Investors’ old worries returned on Thursday. The US Federal Reserve (Fed) has decided to raise interest rates by 50 basis points, the largest since 2000. Expecting an even bigger one, markets have recorded their best daily gains long after the announcement. However, these could not be held on Thursday.
The Dow Jones index of standard values closed down 3.7 percent at 32,998 points. The broader S&P 500 fell 4.6% to 4146 points. The Nasdaq index fell 5% to 12,318 points. Fed Chairman Jerome Powell ruled out a rate hike of 75 basis points for the foreseeable future. In doing so, on the one hand, he provided clarity, but on the other hand, he limited the range of central bank instruments in the event of persistently high inflation. American investors did not believe the Fed was capable of a “soft landing”.
Previously, European exchanges had followed American ones shortly after trading on Wall Street began. The Dax opened 2.2% higher, picking up momentum in US markets on Wednesday. In the evening it closed again down by 0.5 per cent at 13,903 points. The broader FAZ index fell 1.3% to 2336 points. Europe’s leading Euro Stoxx 50 index lost 0.7 percent to 3696 points.
Bond markets also reacted to the Fed’s monetary policy decisions with doubts on Thursday. The ten-year Bund yield was still below 1 percent in the morning. Thursday night it was 1.034 percent. US Treasury bonds also reacted strongly. The yield on US 10-year bonds exceeded 3%. In the case of bonds, rising yields are associated with falling prices.
The euro fell again towards $ 1.05 in the afternoon. Limited initial earnings from oil. A barrel of North Sea Brent crude cost $ 110.94 Thursday afternoon, 0.7% more than the previous day. Gold prices fell 0.2% to $ 1,878.25 an ounce.