Following a down week, European stocks cautiously increased on Monday as hawkish remarks from major central banks hinted at the further tightening of monetary policy in 2023.
The stocks 600 index was up 0.5% by midday London time, with all sectors and major bourses in positive territory. Oil and gas led the way with an increase of 2.4 percent, followed by retail sales at 1 percent. In the future, rate increases would need to be sizable and regular.
In line with the U.S. Federal Reserve’s Wednesday action, the Bank of England and the Swiss National Bank raised interest rates by 50 basis points using similar language. Fed Chairman Jerome Powell stated that the central bank’s efforts to control inflation are far from over, stating that policymakers will “have to stay at it.”
The moves caused the Stoxx 600 to fall sharply in two consecutive sessions, taking the European blue-chip index to a near-five-week low.
Asian-Pacific markets fell overnight on Monday as traders struggled to overcome recession fears, while Chinese officials pledged to stabilize the country’s economy by 2023 and keep financial markets liquid.
U.S. stock futures increased slightly in early pre-market trading on Monday after Wall Street’s major averages recorded their first two-week losing streak since September.
Worry Taking Over the Market
Following the major averages’ second consecutive week of losses for the first time since September, stock futures increased on Monday. Investors also found it difficult to get rid of recession worries.
S&P 500 and Nasdaq 100 futures increased by 0.51% and 0.62%. Meanwhile, Dow Jones Industrial Average futures rose 129 points or 0.422%. The Federal Reserve increased short-term interest rates by 50 basis points and hinted at higher rates for a longer period after another down week for stocks. As the central bank increased its prediction for future hikes above previous estimates, saying it now expects rates to rise to 5.1%, concerns over a recession grew.