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European Shares Vary as Traders Check Interest Rate Climb


18 March 2022

European shares vary as traders check interest rate climb – European rallies fought for directions on Thursday, Following a sharp rise in Asian stocks. Traders valued Beijing’s economic stimulus prospects; They were also waiting for the Bank of England monetary policy decision. The Stoxx Europe 600 Index moved between small gains and losses. The previous session ended with 3.1 percent more. Dax fell 0.6 percent. The Cac 40 index was down 0.1 percent.

The move comes after Chinese stocks rose the next day after Beijing promised to take measures to support the economy. The Hang Seng Index rose 7 percent. The CSI 300 index added almost 2 percent. On Wednesday, China’s Committee on Financial Stability and Development vowed to take substantial measures to boost growth and other supportive actions. Concerns over the country’s growth prospects led to a double-digit drop earlier.

It is worth noting that significant growth resistances are observed, Including signs of weakness from the Chinese real estate market. COVID-19 cases also increase in COVID-19 cases, which threatens the authorities to impose a broad closure because it can hinder economic growth. On Wednesday, the U.S. Federal Reserve raised its key interest rate by a quarter of a percentage point for the first time since 2018, in line with market expectations. 

Fed Decision and Shares

Wall Street stocks rose overnight; When the S&P 500 closed more than 2 percent. U.S. futures, which tracks broad gauge stocks, fell 0.1 percent on Thursday. The Fed’s initial rate hike was a bit warm. Consequently, it is unlikely that much will be done to reduce inflation. The most crucial signal was that the Fed indicated that rates would rise during the next six policy meetings this year. At the same time, there are reports that negotiations between Russia and Ukraine are progressing. China will also support economic growth, Which forces the shares to be higher.

The Bank of England, which raised borrowing costs to 0.5 percent in February, will announce that it will tighten monetary policy on Thursday. The BoE must cross the line between growth-killing and recession on the one hand. And on the other hand, between the right to get out of inflation control. Accordingly, the central bank should raise interest rates by 0.25 percentage points later today. Experts estimate that the risks of recession and policy error caused by the central bank are high and growing.

In sovereign bond markets, yields were lower after initially jumping in response to the Fed move. U.S. 10-year Treasury revenues fell to 2.13, up 0.05 percentage points; Wednesday session’s three-year maximum after a brief touch. Bond yields fall when prices rise. As for oil, prices have risen since the first weeks of the Ukraine war. International Brent crude oil hit $140 a barrel earlier this month before falling sharply; it rose to $102.71, for a total of 4.8 percent.

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