Europe points red under Fed pressure
The statements made by US Federal Reserve Governor (Fed) Lael Brainard – the day before the release of the minutes of the last central bank meeting – along with the developments of the war in Ukraine, affected the Asian market and put pressure on futures trading in Europe.
Euro Stoxx 50 futures are down 0.4%.
During Wednesday, investors will focus on the release of the minutes of the Federal Reserve’s latest meeting, looking for clues about the possibility of a 50 basis point increase in the federal funds rate at the next central bank meeting, scheduled for May.
The US Federal Reserve (Fed) will accelerate the withdrawal of stimulus to the economy to try to stem the escalation of inflation. Governor Lyle Brainard said, this Tuesday in a speech at an online conference, that the central bank will begin, as early as next May, to reduce the assets in the balance sheet.
Brainard warned of the “importance of lowering inflation” after the country’s annual rate rose to 7.9% in February. The number is four-tenths higher than it was in January, thanks to higher energy prices due to the conflict in Ukraine, the largest year-on-year rise since January 1982.
“The committee will continue to systematically tighten monetary policy through a series of rate hikes and start reducing the balance sheet at an accelerated pace starting from our meeting in May,” he said of the upcoming FOMC meeting. Open (FOMC), which is scheduled for May 3 and 4.
In Asia, the session closed in the red, mainly due to the technology sector repeating the losses of its North American counterpart on Wall Street, due to the large increase in interest rates for ten years, which was sparked by Brainard’s comments. The Topix lost 1.16 percent and the Nikkei index plunged 1.38 percent. In Japan, SoftBank Group stock fell 2.49%. In South Korea, Kakao lost 2.79%, Naver fell 3.21%, and SK Hynix stock fell 2.58%.
In Hong Kong, Hang Seng fell 1.22% after coming under pressure from Alibaba (-4.05%), Mituan (-2.81%) and Tencent (-1.85%). Shanghai fell 0.16%.