Growth on European Stock Exchanges After Yesterday’s Interest Rate Hike

This morning, stock prices on European exchanges have risen, similar to yesterday on Wall Street, but trading is cautious after the European Central Bank aggressively raised interest rates by 0.75 percentage points. As inflation in the eurozone hovers at record levels, above 9 percent, the ECB has signaled further tightening of monetary policy.

The STOXX 600 index of leading European stocks was up 0.6 percent at 9:30 AM. Meanwhile, the London FTSE index rose 0.95 percent to 7,330 points, while the Frankfurt DAX strengthened by 0.65 percent to 12,989 points, and the Paris CAC increased by 0.64 percent to 6,165 points. Stock prices also rose on Asian exchanges, with the MSCI Asia-Pacific index, excluding Japan, up 1.4 percent around 9:30 AM.

On the Tokyo Stock Exchange, the Nikkei index strengthened by 0.5 percent, while stock prices in South Korea, Australia, Shanghai, and Hong Kong rose between 0.3 and 2.8 percent. Asian investors were encouraged by yesterday’s rise in stock prices on Wall Street for the second consecutive day. The Dow Jones increased by 0.61 percent, while the S&P 500 rose by 0.66 percent, and the Nasdaq index by 0.60 percent.

Indices have risen for the second consecutive day, but trading was uncertain, alternating between positive and negative territory.

Fed leaders are not easing their sharp rhetoric on curbing inflation. Central Bank President Jerome Powell reiterated yesterday that the Fed is ‘strongly committed’ to controlling inflation and will continue to tighten monetary policy until that goal is achieved.

Charles Evans, president of the Chicago Fed branch, supported Powell, stating that controlling inflation is a priority. Therefore, it is clear that the Fed will continue to aggressively raise interest rates to curb inflation, which is hovering around the highest levels in over 40 years.

The Fed has been raising rates since March and will further increase them at the two-day meeting on September 20 and 21. 

A new, third consecutive increase of 0.75 percentage points is expected, bringing rates to a range of 3 to 3.25 percent. It is also estimated that by the end of the year, rates could reach 3.7 percent, and by March next year, 4 percent.