So Much interest rate decision is rare. With the Federal Reserve, the European Central Bank, the Bank of England and the Swiss National Bank, several of the world’s most important central banks decided on their further monetary policy this week – and with it some hopes on the stock markets were dashed.
The rate hikes themselves were expected in much the same way as they came. The further prospects of the monetary politicians acted as a damper on the mood on the stock markets, from which many market observers concluded that a normalization can probably not be expected until 2024. “The statement that it intends to continue raising interest rates at a steady pace can only be interpreted to mean that there will be two more steps of 50 basis points each – with a clear risk to the upside,” said Martin Moryson, chief economist for Europe in the fund company DWS.
Dax loses almost 1000 points
While investors had just dared to step out of cover again in the past few weeks and allowed prices to rise with high demand, caution returned this week. The German leading index Dax alone lost almost 1000 points within a few days, from its multi-month high on Tuesday at almost 14,700 points to 13,800 during the day on Friday.
If you look at the biggest losers among the individual stocks in the first German stock exchange league, it is probably above all concerns about a further slowdown in the economy that are worrying investors. Because there are companies like Porsche Holding, the industrial groups Siemens and BASF or even Deutsche Post, all of which benefit from a smoothly running economy.
Fed in the splits
Turning to America, State Street Global Advisors’ Elliot Hentov said the Federal Reserve’s statements appear to have also been trying to reassure overly optimistic stock investors. The broad American stock index S&P 500 was up almost 10 percent from the last Fed meeting to this week alone. “This is forcing the Fed to do a balancing act between acknowledging declining inflation trends and signaling that monetary policy needs to remain tight for longer,” Hentov said.
One thing above all seems certain after this week: the uncertainty among investors will remain for a while – and with it the high volatility on the stock exchanges.
