Shares fall in the US but rise in European markets after the FRS rate hike

Shares fell in the US on Wednesday but rose in Europe, while the US dollar rose after the US Federal Reserve (FRS) decided to raise its key interest rate by three-quarters of a percentage point.

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The US central bank made such an interest rate increase for the third meeting in a row. Prior to its announcement of the decision, share prices on Wall Street had risen, following gains in leading European bourses and declines in Asian bourses.

Markets had already anticipated another significant interest rate hike, but were unprepared for the FRS Open Market Committee’s forecast that the base rate would need to be increased further.

FRS chief Jerome Powell stressed that “tight” monetary policy was needed to bring annual inflation down to 2%. He admitted that such steps to reduce inflation would mean a period of slower economic growth and higher unemployment.

“The Fed will be ruthless in restoring price stability,” said Russ Moulds, chief investment officer at AJ Bell. “Higher [procentu] rates will be painful for households and businesses, and the labor market is being watched closely for signs of downsizing and hiring freezes.”

The FRS announcement also helped boost the US dollar, which hit a 20-year high against the euro. The British pound also fell against the dollar, even though the Bank of England is set to announce a significant interest rate hike on Thursday.

Oil prices fell on concerns of weakening US demand.

The Dow Jones Industrial Average fell 1.7% to 30,183.78 on Wednesday, the Standard & Poor’s 500 fell 1.7% to 3,789.93, and the Nasdaq Composite fell 1.8% to 11,220.19 points.

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London’s FTSE 100 rose 0.6% to 7,237.64 on Wednesday, Frankfurt’s DAX 30 rose 0.8% to 12,767.15 and Paris’ CAC 40 rose 0.9% to 6,031. .33 points.

WTI crude fell 1.2% to $82.94 a barrel in electronic trading on the New York Stock Exchange on Wednesday. “Brent” crude oil price on the London exchange decreased by 0.9% to 89.83 dollars per barrel.

The euro fell to $0.9971 to $0.9847 per euro on Wednesday, the British pound to the US dollar fell from $1.1381 to $1.1275 per pound, and the US dollar to the Japanese yen rose from 143.75 to 144.02 yen per dollar. The euro fell against the British pound from 87.61 to 87.31 pence per euro.