Key Points

  • Stocks in the Eurozone have plummeted as the Markets anticipate a decision from BoE over the interest rates policy.
  • Market sentiment is sour after US Federal Reserve Chair Jerome Powell forecasted more rates hike for 2023

Eurozone has received news on the necessity for further rate hikes in a sour way making the stocks plummet as they await today’s decision from BoE. The Benchmark Stoxx 600 was down 0.92% at the open Thursday markets, with all sectors trading in the red.

Eurozone stocks plummet ahead of expected rates hike

Inflation rates in the US and the UK are still way above the targets of 2% by the end of the year. As such, more action is needed from the banking heads to keep the economies floating while driving down inflation. While the US has paused rates hike for June 2023, the UK is expected to hike its rates following a positive report from its jobs markets.

This decision will cause more pain in the markets as borrowing money will be more expensive. As a result, the Eurozone Stock market has reacted negatively as it digests the information, with key stocks like the STOXX 600 index falling by almost 1%. All sectors also traded in the red section, with the Automobiles sector falling by 1.55% as banks topped with 1.9%.

The STOXX 600 index has posted declines in all sessions this week. 

“Nearly all FOMC participants expect that it will be appropriate to raise interest rates somewhat further by the end of the year,” Powell said in remarks prepared for testimony before the House Financial Services Committee Wednesday. 

UK investors now focus on the Bank of England decision, which is set to hike rates by around 25 or 50 basis points as inflation rates remain stubbornly high. These developments came when the Swiss National Bank announced a 25 basis point rate rise, its fifth consecutive hike on Thursday, pushing its rates policy to a 1.75% high. 

Analysts are calling for investors to be more cautious with the markets as it will be a long road to reducing current inflation rates. As such, more pain is expected to hit the markets as uncertainty about the total recovery period looms as ‘key’ economies like the US and China are also distressed. Keep watching Fintech Express for more updates on banking and Fintech-related developments and news.