The Fed indicated that it would soon raise interest rates to reduce inflation. Hence, Wall Street futures and global stock exchanges sank on Thursday. Frankfurt and London opened at a low level. Market criteria in Tokyo and Seoul fell by an extensive margin of more than 3%. The Fed said it would soon be appropriate and expected to raise rates. Investors expect growth from March to 4 this year. Monthly purchases of bonds that reduce long-term rates by injecting money into the financial system; Will be phased out in March.
According to the CEO of Geo Securities, everyone will know Fed’s decision globally. The era of ultra-low interest rates is over. Instead of stimulating the economy, all central banks will start fighting inflation. In early trading, the FTSE 100 fell 0.2% to 7.452.31; DAX lost 1.5% to 15,233.46. CAC 40 dropped to 6,918.14, up 1%. Dow Jones Industrial Average and S&P 500 index futures fell 0.5% on Wall Street. On Wednesday, the S&P 500 decreased 0.1%. According to the Fed, it rose 2.2% since the previous day. The Dow Jones Industrial Average fell 0.4%. The Nasdaq composite slightly changed and lost 3.4% profit earlier. In Asia, the Nikkei 225 dropped to 26.170.30, up 3.1%. Hang Seng changed to 23,807.00, up 2%.
Global Stocks and Expectations
Kospi fell to 2,614.49 in Seoul, up 3.5% after the stunning debut of LG Energy Solutions, one of the largest manufacturers of electric car batteries in the market. The day ended on the South Korean Stock Exchange with the second-highest value after Samsung Electronics; Since its initial public offering attracted $11 billion. The Shanghai Composite Index dipped to 3.394.25, up 1.8%. Sydney’s S&P-ASX 200 fell to 6.838.30, down 1.8%. Sensex lost 57.423.10, up 0.8%. New Zealand dropped since inflation reached a 30-year high of 5.9%; In the last quarter of 2021, a year ago. Jakarta advanced, while Singapore and Bangkok fell.
On Wednesday, major Wall Street indices rose after the Fed announced; However, the achievements were rejected as Chairman Jerome Powell received questions about how and when the central bank will allow its balance sheet to decline through a pandemic after purchasing trillions of dollars in bonds. This will put pressure on market interest rates. Sales accelerated as Powell acknowledged high inflation, which slowed down the business. This could force the Fed to become even more aggressive in raising rates and removing support for the market.
The last time the Fed raised interest rates and reduced the balance simultaneously was at the end of 2018. The S&P 500 lost almost 20%. After the December meeting, Powell said the inflation situation is about the same; However, slightly worse.
Fed Decision
The Fed’s near-zero interest rates helped push up stock prices for nearly two years; However, markets have been volatile since Powell and other officials said in December; That plans to reduce economic stimulus may be accelerated in the fight against rising inflation.
In the New York Mercantile Exchange, the US crude oil futures traded at $87.05 a barrel and lost 30 cents. The contract rose to $87.35 on Wednesday, for a total of $1.75. The Brent oil price was $88.35 and fell 39 cents in total. The dollar rose to 115.00 yen on Wednesday. The euro fell to $1.1200.
