Rates rise worries fuel selling pressure
The prospect of another aggressive rates rise kept up the pressure on Wall Street shares ahead of tonight’s decision by the US Federal Reserve.
The Dow Jones Industrial Average lost 1% last night and is at its lowest level in two months, a performance matched by the S&P 500 and tech-focused Nasdaq.
The declines reflected fears of a hard landing for the US economy if there’s another increase of at least 0.75% in the Fed funds rate later today.
The FTSE 100 index finished 0.6% lower last night and the FTSE 250 fell by 1.4%, with a pause in the selling pressure expected today as investors stay on the sidelines ahead of the decision and subsequent comments by Federal Reserve chair Jerome Powell.
Michael Hewson, chief market analyst at CMC Markets, said: “There are some voices calling for 100 basis points. However this could well come across as knee jerk and suggest that the Fed is panicking and could send completely the wrong message to markets.
“The Fed needs to show it is in control of events and raise rates by 75 basis points but also indicate that further substantial rate rises would be forthcoming until there is clear evidence that inflation is starting to come down at a sustainable rate.”