Spreadex Market Update
US rate-hike concerns continue to plague market as FOMC member Lacker stokes hawkish fire
The Dow Jones itself dropped 150 points after the bell, leaving the index at a fresh 2 month low. The main thrust of the losses remains the increased US rate hike chatter following first the stronger than forecast inflation figure on Tuesday, and then last night’ Fed meeting minutes revealing a central bank slightly more ready to embrace an interest rate rise than the market seemed to expect. Adding to that latter idea was Bank of Richmond Fed President, non-voting FOMC member and noted hawk Jeffrey Lacker, who claimed the market is underestimating the likelihood of a rate rise whilst talking up the chances of a July, not June, hike, arguing that the central bank may want to wait until after the UK’s EU referendum.
The FTSE remained the day’s worst performer, dropping nearly 2% to graze its own 2 month nadir. The index was undone by the losses in its travel and commodities sectors, alongside Royal Mail’s sustained decline, all of which joined the market-wide rejection of the whisperings of an impending US rate hike (something, remember, that could be undermined by a weak US Q1 GDP figure next Friday).
Like the rest of the markets the Eurozone indices looked rather sickly this afternoon, the DAX and CAC falling by 1.4% and 0.9% respectively. The region actually had its own central bank meeting minutes to pore over this Thursday; however, April’s notes didn’t throw up anything as noteworthy as what was produced by the Fed. Draghi and co. are still waiting to see if March’s stimulus package will take hold before deciding anything new, although the minutes did provide further evidence of the frosty relationship between the central bank and its main detractor Germany.
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