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US equities sharply fell overnight. The selling began after the Federal Reserve’s 50 basis point interest rate hike yesterday, taking the main rate 4.25% to 4.5% range. The shift to a lower gear following four consecutive 75 basis point hikes was widely anticipated, and bond yields barely moved in response. Overnight, US retail sales data was released – retail sales declined more than expected in November which heightened concerns around rate hikes, with the data showing that inflation has taken a toll on consumers. The Dow Jones saw its worst day in three months, falling more than 700 points or 2.25%, the S&P500 dropped 2.5% and the Nasdaq dropped 3.2%.
European markets also closed in the red after the European Central Bank signalled that “significant” rate increases are still to come. The STOXX 600 down 2.85%, Germany’s DAX and France’s CAC both closed more than 3% lower, and the FTSE 100 down 0.9%.
What to watch today: