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European stocks recover from geopolitical shock before big Fed move According to Reuters



© Reuters. German stock price index DAX chart illustrated at the stock exchange in Frankfurt, Germany, September 20, 2022. REUTERS/Staff

By Shreyashi Sanyal and Johann M Cherian

(Reuters) – European shares ended higher on Wednesday ahead of the US Federal Reserve’s likely third straight rate hike later in the day, while dismissing Russia’s announcement on the mobilization of a part of the military.

The continent-wide index ended 0.9 percent higher, rebounding after hitting its lowest level since early July a day earlier after Russian President Vladimir Putin also accused the West of “extorting.” pre-nuclear” about the war in Ukraine.

Attention gradually turned back to US central bank policy, as the Fed raised its benchmark lending rate by 75 basis points (bps) later in the day, continuing its aggressive fight against persistently high inflation. .

Chris Beauchamp, head of market analysis at online exchange IG, said: “Vladimir Putin’s decision to partially mobilize while swinging his nuclear arsenal is a serious development, but Right now the markets are too focused on what they hope the Fed can say.”

Some traders expect the US central bank to raise rates entirely by percentage points. [FEDWATCH]

“The 75 bps gain is priced in at this stage but where does it get interesting, what will the final rate be?” Giles Coghlan, head of market analysis, HYCM.

“The market wants to see if the Fed is saying we’re actually in a tougher situation than we thought, so we’re going to have to be more aggressive than you might expect.”

Defense stocks were also supportive, with Rheinmetall, Leonardo, Thales and BAE Systems (OTC:) up 4.0% to 9.3%.

However, Russia’s military deployment has raised concerns about the conflict increasing the possibility of a division of power and the possibility of a winter blackout after Russia abruptly turned off a faucet on a major pipeline. to Europe.

Germany confirms the nationalization of Uniper, its largest Russian gas importer, as it scrambles to secure non-Russian energy sources. Shares of the gas importer fell 25.3%.

Fortum shares jumped 9.5% after Germany agreed to nationalize Uniper by buying a stake in the Finnish company.

Energy shares rose 1.6% as oil prices climbed following the mobilization news. [O/R]



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