Central Bank Actions In U.S, UK, Europe and Japan Dominate European Market Sentiment

Bridgette Randall
18 Sep, 2023
Frankfurt

Rate anxieties dragged market indexes down in Monday's trading and investors awaited central bank decisions this week. 

The yields trended higher ahead of the rate decisions from the Bank of England and the U.S. Federal Reserve later in the week. 

The Bank of England is scheduled to lift its rate by 24 basis points and the Bank of Japan is also scheduled to announce its rate decision on Thursday. 

Central banks of Sweden, Norway and Switzerland are also set to announce their rate decisions this week. 

The U.S. Federal Reserve is likely to pause rate hike on Wednesday but investors are worried that higher rates are likely to stay longer as inflation shows no sign of abating. 

Despite multiple rate hikes by the central bank in the UK, inflation in the UK has stayed above 7%.  

The yield on the UK bonds have been on the rise in anticipation of rate hikes, and led other sovereign bond yields in the European Union, surpassing even Italy which generally  

 

Europe Indexes & Yields

The DAX index decreased 0.6% to 15,798.56, the CAC-40 index declined 1.1% to 7,299.54 and the FTSE 100 index inched down 0.3% to 7,689.19.

In the previous week, the DAX increased 0.7%, the CAC 40 advanced 1.6% and the FTSE 100 jumped 3.4%. 

The yield on 10-year German bonds increased to 2.69%, French bonds traded higher to 3.24%, the UK gilts edged up to 4.38% and Italian bonds rose to 4.49%.

The euro edged lower to a three-month low to $1.066, the British pound to $1.239 and the U.S. dollar fetched 89.61 Swiss cents.

Brent crude increased $0.74 to $94.66 a barrel and the Dutch TTF natural gas decreased €0.75 to €35.74 per MWh.

 

Europe Stock Movers

Societe Generale SA plunged 11% to €23.58 after the recently appointed chief executive announced a plan to cut costs and lift stagnant sales by 2026. 

However, investors sold stock after the revenue and earnings outlook fell short of investors' expectations. 

Nordic Semiconductor ASA dropped 13.5% to €9.25 after the Norwegian chipmaker lowered its third quarter revenue outlook amid ongoing slump.