Global Stocks Steady After Fed Rate Hike

Europe's stock markets consolidated strong gains made in Asia on Thursday, after the US Federal Reserve pressed ahead with its first interest rate rise in more than three years.

The EuroSTOXX 600 was steady, 0.1% lower after an initial rise. The Nikkei in Tokyo and emerging market stocks both leapt 3.5% after a rocky few weeks. Wall Street's S&P 500 surged 2.2% overnight. 

Bond markets were starting to calm down after treasury yields had spiked to nearly three-year highs following the Fed's signal that it also planned to hike rates at every meeting for the remainder of this year.

Ten-year US treasuries were last at 2.12%, while Germany's benchmark 10-year Bund yield slipped back two basis points to 0.382% from its highest rate since November. Meanwhile, commodity markets continued to swing back and forth, with oil prices back over the symbolic $100 level again.

What does this mean for me?  

Despite the ongoing war in Ukraine, markets responded well to news of the Fed’s interest rate hike. This upbeat response shows that investors have been waiting on news of rate increases and policy tightening.

With central banks, like the Bank of England, expected to follow suit with their own hikes soon, it is hoped that a correction in the market will see lower inflation bring down consumer prices.

For the diversified investor, it will be clear from these moves that markets enjoy certainty and respond well when policymakers make decisive decisions in accordance with what markets believe is required.