Stock markets in Europe closed higher today following a difficult week, as the drop in UK, German and French bond yields supported equities.
Equity markets are experiencing low volatility today as traders look ahead to the Federal Reserve’s meeting on Wednesday, interest rate futures are factoring in a high probability of a 75-basis points hike.
The euro continues to see high levels of volatility more than 24 hours after the European Central Bank hiked interest rates by 50 basis points.
The European Central Bank caught some by surprise as it lifted interest rates by 0.5% as the bank previously hinted about a 0.25% lift.
The IMF lowered its growth forecast for the global economy from 2% to 1.2%, in addition to that it also downgraded next year’s outlook to 0.8% from 2.1%.
Stock markets are enjoying a rally as traders have shrugged off concerns there might be an energy shortage in Europe.
Stocks markets are pushing higher this afternoon as traders believe the Federal Reserve might not be as hawkish as previously predicted.
The fall in government bond yields has paved the way for a rally in stocks. Lately there has been a strong inverse relationship between yields and equities and that is playing out today.
Worries about inflation are gathering pace as the US producer price index (PPI) rate jumped to 11.3%, close to its record high.
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