Latest reports regarding intensifying inflation rates in eurozone economies and rising bets on aggressive interest rate hikes pushed down stock markets around the globe on Wednesday.
European, and American markets witnessed increasing negative sentiments among investors regarding aggressive interest rate hikes by US Federal Reserve and European Central Bank. A report released by Eurostat today revealed that inflation in the eurozone region hit 9.1% in the month of August.
Following the release of inflation rate statistics, various economists and market analyst opined that European central bank would continue pursuing aggressive interest rate hikes showing no signs of relaxing policies. Investors and traders are also expecting stiffer monetary and fiscal policies from European economies as any increase in interest rate hike will furthermore slow down the already lagging economies.
According to renowned bankers and economists, Germany, which has the largest economy in the European Union, is already slipping towards a recession. The slowing down of economic activity and resulting decrease in the economic output are pointed out as the reason for Germany to move into recession.
FTSE 100 Index of The Financial Times Stock Exchange (FTSE) in the United Kingdom, tanked 77.48 (-1.05%) points today to close the markets at 7,284.15. The Decreasing price of Brent Crude in the international market led to a decline in the value of the pound against the US dollar. Distrust among investors regarding the economic condition of the United Kingdom also played a major role in the pound weakening to below $1.17.
Deutsche Boerse DAX Index in Germany closed the market today by declining 126.18 points (-0.97%) as the increasing inflation rate in the German economy kept investors and traders at bay.
CAC 40 INDEX of France declined by 85.12 points on Wednesday as the European central bank is reportedly planning to increase the rates of benchmark interest in the eurozone. The index has declined by 14.37% compared to the same period last year.
As of 31 August, 2:22 pm EDT, NASDAQ Composite Index is standing at 11,853.05 with a decline of 30.08 points. S&P 500 Index and Dow Jones Index stand at 3,971.29 and V, both being in the red. Statements made by Jerome Powell, Chair of US Federal Reserve during the Jackson Hole symposium had sparked negative sentiments in the American capital markets. While investors were expecting to ease in interest rate hikes, Jerome Powell announced that Federal Reserve will be tightening policies to bring down inflation rates in the country below the benchmark of the US Federal Reserve.