Day of caution on the European stock markets, which will know this Thursday after the closing of the interest rate decision of the US Federal Reserve (Fed). In other words, they won’t be able to quote on this major event until Thursday, when the European Central Bank (ECB) is also expected to announce another rate hike. The Ibex-35 remains in the tail of Europe with drops of 0.2% and still below 9,100 points, weighed down by another day of declines – albeit much more moderate – in the banking sector this time contagious to other major selective stocks such as IAG (-2.8%) and Repsol (-1.7%), hit by the drop in oil prices. The barrel of Brent, a reference in Europe, fell sharply again, almost 3%, to $ 73. In just 3 sessions there is more than 8% left of the $80 that was going around at the end of April. The West Texas type barrel is about to lose $70. Behind the decline lies the expectation of further rate hikes by central banks. A fight against inflation that threatens to curb economic growth and thus the demand for this raw material. While awaiting the Fed’s final decision, investors are well aware that the banking crisis that erupted in the US in March could not have ended without the intervention and sale of First Republic Bank. “It seemed like the last problem to solve, but the sharp falls in prices of most of the regional banks on Tuesday left us somewhat perplexed and very concerned,” Link Securities analysts admit. “It is true that in these crises many investors profit and launch themselves like hyenas against what they consider to be the weakest pieces. And there was some of that too, as most of the entities whose prices were attacked have just presented their quarterly earnings, which have generally been very well received by analysts and investors,” the experts clarify. In any case, the scenario puts more pressure on the Fed, which again has to choose between strict inflation control or financial stability in the US. Against this background, part of the market expects the US central bank to even start lowering its benchmark interest rates before the end of the year, something the Fed has repeatedly denied, however, linking its future actions to the published data. Especially those related to inflation.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
