Global markets reacted negatively to the latest announcements from the Federal Reserve
U.S. and European stock markets posted sharp declines on Thursday in reaction to the Federal Reserve’s latest minutes, indicating that a June interest rate hike is likely if economic data is sufficiently positive. An interest rate hike limits the public’s available funds for investment, prompting the declines seen today. Furthermore, the reduced amount of available money boosts the dollar against its peer currencies, affecting many aspects of the global markets, most notably commodities. By mid-day, the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite all fell around 1%.
European shares were around 1-2% lower nearing the end of their session. Some of the Fed’s comments referred to the dangers of a Brexit, a move that would undermine the European Union. The Fed’s move towards a tighter monetary policy has also highlighted the European Central Bank’s negative rate policies as a means to bolster the economy. The policies have had their effectiveness questioned lately.
This week’s major economic data releases conclude with today’s U.S. housing data. Will the markets continue to decline as a result of Fed’s push for higher interest rates? For the most important binary options news, stay updated with OptionsClick, the top binary options trading broker.