Hawkish Fed Rate Path Causes European Stocks Decline. – Europe Market Wrap

Following the Fed’s more aggressive stance on interest rates on Thursday, European markets gave up some of their gains.

The Stoxx 600 lost 0.6% after rising the highest in a month following Wednesday’s lower US inflation print. The Dollar and Treasuries saw minimal movement, while the S&P 500 and Nasdaq 100 were poised to reach new highs. Separately, bonds issued by the EU declined following the announcement by MSCI that it would not include the debt of the EU in its line-up of government bond indexes.

Following news that the US core consumer price index dropped to its lowest level in more than three years, risk-on assets saw a spike. Subsequently, the Fed reduced the number of quarter-point interest rate cuts it had planned for this year to one from three in March.

After rising for three days, oil prices fell as investors considered the unexpected increase in US crude stocks and the prospect of increased long-term Fed rates. Gold fell.