Once again, the rise in government bond yields is acting as the catalyst for the sell off in stocks.
The Bank of England amplified recession fears by forecasting the British economy will contract by 0.25% next year, while at the same time, hiking interest rates by 0.25% to 1% - the highest level since 2009.
Volatility is low across the board as traders await the Federal Reserve meeting. Broadly speaking, economists are expecting interest rates to be hiked by 0.5%.
Equity markets are mixed following yesterday’s volatile session, which saw a flash crash in European markets, and US equities underwent a bullish turnaround.
Stock markets in Europe are pushing higher even though tensions around Russia have ticked up. President Putin has threatened to hit back at countries that are assisting Ukraine. Gas supplies into the EU are being monitored as there are some worries the energy market could become weaponised.
The US dollar index came under a little pressure following the shock announcement the US economy contracted by 1.4% in the first quarter of this year, which was a big surprise as economists were expecting growth of 1.1%.
Equity markets in Europe and the US are experiencing moderate volatility as Russia announced it will cease gas exports to Bulgaria and Poland.
Earlier today we saw a reversal of yesterday’s fortunes as European stock markets recouped some of the ground that was lost yesterday.
A perfect storm of fears about inflation, the prospect of higher rates and a lockdown in Shanghai are weighing on sentiment.
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