by European indexes tanked on Friday following another rate raise by BOE. This is because investors are worried about future uncertainties and how they will be affected. Meanwhile, the British administration will share fiscal updates on Friday, which investors hope will contain good news.
Stocks Slumped After BOE Hiked Rates
Germany’s Index, DAX, recorded a sharp decline of 0.6 percent at 07:40 GMT on Friday. Following in its step was France’s CAC 40, which dropped 0.4 percent. Also, Britain’s index, FTSE 100, dipped 0.7 percent.
Stocks fell because investors curtailed their risk appetite after BOE once again raised interest rates. Furthermore, economists believe the measures adopted to combat inflation will slow economic growth.
Thursday saw the Bank of England (BOE) boost key rates by 50 basis points for the seventh time. Also, the Swiss National Bank stepped up basis points after meeting earlier this week. The Norges bank in Norway likewise stoked rates by 50 basis points as the UK.
Norway, however, promised further increment of key rates at undisclosed future dates.
United States federal reserve and the European Central Bank (ECB) wound up with similar injunctions on rates. Both agencies exacted a 75-basis point increase, as analysts had presumed.
Oil prices keep trending downwardly for four weeks in a row. Central banks’ hawkish approach to rein in inflation contributes to its decline. Also, the rising fear of slowed economic growth added to its bearish condition.
USOIL fell 1.6 percent to trade at $82.15 per barrel. Brent contract futures dropped 1.5 percent to trade at $89.07. Gold also saw a drop to $1674.90 by 0.4 percent.
Europe’s Economic Standing
HSBC put out a warning on the current gloomy economic situation in Europe. It stated that the Russia-Ukraine war had caused a lot of disaster to its economy.
The importation of gas products has suffered a setback because Russia refused to supply fuel to Europe. Also, prices of commodities such as food and energy are higher than ever, clogging development. On top of everything, central banks continue tightening monetary policy to oust inflation.
For now, investors are concerned with Kwasi Kwarteng’s speech on Friday. As the new finance minister prepares to deliver his first fiscal update, investors are hoping for a silver lining. His report will contain details of Britain’s budget analysis for the coming months.
The British parliament referred to the update as Britain’s mini budget. The budget will disclose how the country seeks to scale a supposedly harsh winter now upon it.
Spain, on the other hand, could be enroute toward bright days ahead. The country recently lifted its growth expectation from 1.1 percent to 1.5 percent. Its initial 1.1 projection was from two months back.
Meanwhile, France and Germany maintain a tight spot as their manufacturing PMI data remain negative. The surging cost of energy continues dealing their industries death blows.
Euro fell against the USD to trade at $0.9778 at press time.
