Weekly Economic Roundup: Central Bank Decisions and Global Markets
This week’s economic landscape was dominated by several major central bank decisions and their impact on global markets. On Tuesday, the European Central Bank (ECB) kept interest rates unchanged but hinted at a potential rate hike in the near future, citing rising inflation. The pound experienced a slight increase following this announcement due to investors’ optimism about an earlier rate hike than previously anticipated.
Fed Decision
On the other hand, on Wednesday, the U.S. Federal Reserve raised its benchmark interest rate by 0.25 percentage point – the first increase since 2018. This move was widely expected, as the U.S. economy has shown signs of strength in recent months. The dollar index strengthened against its major peers following this decision, and U.S. Treasury yields reached their highest levels since 2018.
Global Markets
Global stock markets saw mixed reactions to these announcements. Asian markets closed mostly lower on Thursday, with the Japanese Nikkei and Hang Seng Index both posting losses. European stocks followed suit on Friday, with the DAX and FTSE 100 both experiencing slight declines. However, U.S. markets remained relatively stable, with the S&P 500 and Nasdaq Composite both closing slightly higher for the week.
Commodities and Oil
Commodity markets also saw significant movements this week. The price of crude oil rose by over 4% following the ECB’s announcement, as well as OPEC+ agreeing to extend production cuts. Gold prices remained stable despite these market fluctuations, with investors continuing to seek safe-haven assets amidst geopolitical tensions and economic uncertainty.