U.S. markets had a volatile trading session and ended sharply lower on Wednesday, while Jerome Powell signals that Fed not close to done with rate hike.
The Fed raised rate by 0.75% as expected and the target federal funds rate was set in a range between 3.75% and 4.00% but Investors had been disappointed that after a 75-basis point rate hike the Fed did not signal a willingness to begin downsizing the rate hikes at its December meeting. The S&P 500 decreased at 2.5%, to 3,759.69 level the Nasdaq Composite fell at 3.36%, to 10,524.80, while the Dow Jones dropped 1.55%, to 32,147.76 points.
UST 10Y yields raise at 2.37% to 4.157 level putting pressure on rate-sensitive sectors including tech. Apple, Microsoft and Amazon.com fell more than 3%.
EU markets opened lower on Thursday, as another hefty hike by the Federal Reserve and weak Chinese economic data raised global recession fears ahead of a policy meeting by the Bank of England. The DAX index traded 0.65% lower at 13 191, CAC 40 dropped 0.6% to 6 240 level while and the FTSE 100 contract in the U.K. fell 0.3% to 7 127. Attention Thursday now turns to the Bank of England, which is also expected to hike by 75 basis points in order to combat inflation running at double digits. Such an increase would be its biggest since 1989, and would put its base rate at 3.0%, the highest level since 2008.
SSA opens lower as expectations of a Fed pivot vanished with Powell’s press conference that followed – in addition to playing down an immediate pivot, Powell said that rates would be hiked above the September FOMC expectations. ANGOL (-.875) leading the selloff with KENINT (-.625) in close pursuit. ETHOPI opens flat after a 4-pt surge at the close on Thursday as the government and the TPLF agreed to a truce.
The local FI market remained quiet. The bonds market saw little activity and closed on a negative note with yields across the curve posting higher by 1bps. There was little activity in the Treasury Bills market, as yields closed flat across the curve.