Federal Reserve frustrates stock markets..and Dow Jones loses 270 points.
The US Federal Reserve decided to raise its funds rate by a quarter of a percentage point at its tenth meeting, reaching a range of 5%-5.25% for the first time since 2007, and the bank’s president reignited. Interest rates were cut by the end of the year, so stock indexes erased their modest gains, with the Dow Jones Industrial Average trading the day down 0.80% to 270 points.
Shares rallied in the first minutes of a press conference following the announcement of the bank’s decision to raise interest rates, with Powell hinting at the possibility of stopping hikes at the current level, but they fell sharply when the bank’s chief ruled out anything to do with it. Markets are currently reflecting a move to cut interest rates in 2023.
The Nasdaq index, which is more sensitive to interest rate changes, also fell by nearly half a percent during Wednesday’s trade, which investors have been waiting for since March, which saw the last meeting of the world’s largest central bank. The S&P 500 index’s loss exceeded two-thirds of a percent.
Powell insisted that the road to getting the inflation rate back to its target of 2% was still long, but he promised journalists and millions who followed him the safety of the US banking system. Less than two months.
In Europe, European shares rose ahead of the Federal Reserve’s decision on Wednesday, as investors returned to optimism after the Federal Reserve raised interest rates, signaling a pause in a 14-month cycle of currency tightening. After the last day..
Despite the reality of European market expectations in this regard, most dealers did not wait to rule out this year’s interest rate cut, which led to a rise in the Stoxx 600 index of European shares. , following a sharp sell-off in the previous session. .
Oil and gas companies rose 0.6%, recovering from losses in Tuesday’s session, to top the index’s gainers.
In a related vein, losses in oil prices accelerated after the announcement of the Federal Reserve’s decision, with growing expectations that the US economy will enter recession, continuing its sharp losses from the previous session.
Brent crude futures fell nearly $3 or 4% to $72.33 a barrel, the lowest level for crude oil since December 2021.
Brent crude fell to $71.70 a barrel, its lowest since March 20.
Also, US West Texas crude lost more than $3, or 4.3%, to settle at $68.60 a barrel, the lowest since March 24, after hitting $67.95 at the lowest moments of the day.
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