The acceleration of the Fed on the next rate hikes is at the center of attention on the European lists, with the indices opening weak but without jolts. The US central bank, in its awaited meeting on Wednesday 17 June, left the door open to two rate hikes in 2023, sooner than expected, and improved estimates of US GDP growth and inflation. Fed number one Jerome Powell reassured the markets that a change of course is not imminent but the central bank is starting to discuss easing measures to support the economy and this is enough for the world markets to fall back from the highs. Analysts expect volatility to rise.
Dollar and US bond yields up
The greenback took off on Wednesday evening, posting its strongest daily rise in 15 months and climbing to the top in two months, and is now hovering around 1.20 against the euro. Bond yields also rose as 10-year Treasuries jumped 10 basis points.
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Gold on the rise after the sell-off. Weak crude
After the sharp slide in Wednesday’s session, with a drop of more than 2.5%, gold prices are recovering. The precious metal has fallen to its lowest level since May 6th. Crude oil remains at its highs, but weakens after the recent race on continued expectations of a strong rebound in demand, with Brent at its highest since April 2019.
Tokyo closed weak (-0.93%) after Fed indications
Weak session for the Tokyo Stock Exchange, weighed down like Wall Street by the US inflation projections revised upwards by the Fed, which plans to raise its key rates in 2023. The Nikkei index of leading stocks fell by 0.9% stopping at the close at 29,018 points while the broader Topix index lost 0.6% to 1,964.06 points. While raising its inflation forecast, the Federal Reserve again assured Wednesday that the acceleration of the rise in prices is transitory and which should stabilize at 2.1% next year. Meanwhile, in Japan, the government is preparing to announce the almost total revocation of the state of health emergency from next week in various departments, including that of Tokyo, which in just over a month will host the Olympic Games.