Traders are nervous ahead of tomorrow’s European Central Bank meeting as there is chatter the bank will use the meeting as an opportunity to confirm that rates will be hiked in July.
Traders are a little optimistic ahead of the release of the minutes from the recent Federal Reserve meeting, where rates were hiked by 0.5%.
The euro is higher again as Christine Lagarde – the European Central Bank president - said she is attentive to the exchange rate.
The brutal sell-off in US stocks last night ensured European markets got off to a very tough start this morning.
Markets have fallen back into their old habits as an increase in yields has sparked a sell-off in stocks. Equity markets experienced low volatility at the start of the week and that was because US bond yields cooled, but today the 10-year yield traded above 3%, which speed up the decline in equities.
The mood has lightened today and that has prompted dealers to swoop in a snap up relatively cheap stocks.
Stock markets are enduring large losses due to concerns about rising inflation, higher interest rates and the war in Ukraine.
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.
Equity markets in Europe and the US are experiencing moderate volatility as Russia announced it will cease gas exports to Bulgaria and Poland.
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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