European indices started the day lower than expected ahead of Christine Lagarde’s speech later in the day. Germany’s DAX index declined by more than 0.77%. UK’s FTSE 100 index as well as French CAC 40 index also fell. Euro STOXX 50 slipped as well.
DAX Index Concerns
The DAX index opened the markets an inch lower after Fed’s hawkish comments on its monetary policy. The Federal Reserve announcement of two rate hikes in 2023, saw many stocks tumble down. The Fed forecast the hike to happen earlier than expected.
US stocks as well as both the ten and 30-year Treasury yields have been declining ever since the Fed announcement, last week Wednesday. Commodity prices have also slipped which affects all other economies tied to them.
Banks, builders, and utility firms that are sensitive to economic fluctuations, have taken a nosedive ever since the Fed’s announcement. According to St Louis Fed President, James Bullard, interest rate hikes may be introduced as soon as next year. This is due to the high inflation growth rates.
Investors are eagerly waiting for Powell’s speech on Tuesday. He will be expected to brief the House of Representatives’ committee on the Fed’s asset purchases program. He will also explain the Federal Reserve’s emergency lending due to the Corona virus pandemic.
Investors are also eyeing Christine Lagarde’s speech before the European parliament later in the day. Economists are hoping to get clues on whether the current inflation rates will persist. The Euro traded at its lowest level since April on Monday. It dropped from $1.21457 to $1.1863.
Mining stocks declined by more than 0.6% as commodity prices declined. Banking shares also fell by more than 0.5%.
Deutsche Boerse was the best performer in the DAX index. The company gained more than 1.70% in its stock earnings. Other top performers include Vonovia, Siemens AG and Adidas. Vonovia gained 1.42% while Siemens AG gained more than 0.90%. Adidas was up by more than 0.85%.
Among the worst performers in the index include Bayer, Fresenius SE and MTU Aero. Bayer led the losses with a 1.75% decline while Fresenius fell by 1.45%. MTU Aero followed suit by a 1.18% drop.