Markets in Europe are expected to remain muted amidst overwhelming anxiety regarding prolonged period of interest rate hikes. Close on the heels of the Fed’s rate hike on Wednesday, the Bank of England and the European Central Bank, both raised rates by 50 basis points, instilling fresh fears of a recessionary economic scenario.
The fears of the Fed’s aggressive interest rate hiking cycle triggering a painful recession had dragged the Wall Street lower on Thursday, with the Nasdaq Composite shedding a whopping 3.2 percent to close at 10,810.53 and the Dow Jones Industrial Average plunging 2.3 percent to finish trading at 33,202.22.
The negative sentiment created by Fed’s hawkish surprise was exacerbated by the aggressive stance of ECB and Bank of England which too raised rates by 50 basis points. The European markets too closed sharply lower on Thursday with Germany’s DAX losing 3.3 percent, France’s CAC 40 dropping 3.1 percent, the pan-European Stoxx-600 shedding 2.9 percent and Switzerland’s SMI dropping 2.5 percent. Losses at the U.K.’s FTSE 100 were far lower at 0.9 percent.
Current indications from the European stock futures imply a minor rebound on Friday. The FTSE 100 Futures (Mar) is currently trading 0.29 percent higher. The DAX Futures (Mar) is currently trading 0.11 percent higher. The CAC 40 Futures (Jan) had closed 3 percent lower on Thursday.
American stock futures however are still in negative territory. The US 30 (DJIA) is down 0.06 percent whereas the US500 (S&P 500) is 0.02 percent lower.
Asian stock markets are trading mostly in the red zone amidst anxiety following the Fed’s hawkish rate warning and deepening recession fears. Japan’s Nikkei 225 led the losses with a close to 2 percent decline. Australia’s S&P ASX 200 has declined 0.78 percent. India’s Nifty 50 and New Zealand’s NZX 50 are trading more than half a percent lower. South Korea’s KOSPI has shed 0.4 percent. China’s Shanghai Composite is trading 0.3 percent lower. Hong Kong’s Hang Seng has however bucked the trend to gain 0.34 percent.
The Dollar Index (DXY), a measure of the Dollar’s strength relative to six currencies, which had surged to 104.88 on Thursday amidst the Fed’s hawkish rate warnings has retreated to 104.35, down 0.20 percent on an overnight basis. The EUR/USD pair increased 0.16 percent to 1.0643 whereas the GBP/USD pair gained 0.28 percent to 1.2210.
Gold Futures for February settlement are trading close to the flatline at $1,787.60 per troy ounce. The previous close was at $1,787.80.
The hawkish Fed guidance which stoked fears of an economic recession continued to drag down both the crude oil benchmarks. WTI Crude Futures for January settlement has decreased 0.39 percent to $75.81, whereas Brent Crude Futures for February settlement has fallen 0.33 percent to $80.94.
Retail Sales (November) from U.K. on Friday Morning is seen falling to 0.3 percent from 0.6 percent in the previous month. Manufacturing and Services PMI flash readings for December are due from France, Germany, Euro Area as well as U.K. Euro Area also awaits the Inflation Rate (YoY) for November as well as Balance of Trade (October) readings.
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