European markets slide amid concerns over interest rate hike

European markets traded cautiously at the open on Thursday as Canada’s surprise interest rate hike raised fears that the world’s central banks will raise global rates longer than expected.

Europe’s region-wide Stoxx 600 fell 0.1 percent, ending Wall Street lower overnight, as traders were upset by the Bank of Canada’s decision on Wednesday to raise its key rate to combat sticky inflation. The bank halted its rate-hiking cycle earlier this year, indicating rates were nearing their peak.

France’s CAC 40 lost 0.1 percent and Germany’s DAX lost 0.2 percent.

“Maybe this move by the Bank of Canada has instilled some sensitivity in the investor mindset. , , If so, the tape could bounce in the next couple of days,” said Mike Zigmont, head of research and trading at Harvest Volatility.

The surprise rate hike followed a similar move by the Bank of Australia earlier this week, prompting investors to re-evaluate the likelihood of further tightening by the US Federal Reserve due to announce its policy decision next Wednesday. inspired to.

The yield on the policy-sensitive two-year note rose 0.04 percentage points to 4.59 percent, and the yield on the 10-year Treasury rose 0.03 percentage points to 3.81 percent.

In Britain, the yield on two-year gilts rose 0.02 percentage points to 4.58 per cent, reaching its peak since September’s “mini” budget. Yields rise when prices fall.

Contracts tracking Wall Street’s benchmark S&P 500 fell 0.1 percent, while those tracking the tech-heavy Nasdaq 100 were 0.4 percent lower ahead of the New York open.

Meanwhile, investors expect official growth data for the eurozone, to be released later in the day, will be downgraded to show output contracted slightly for the previous two quarters.

The revised reading could weigh heavily on European Central Bank policymakers, also due to meet next week, who have previously indicated the economy’s resilience would give them room to raise the deposit rate above the current 3.25 percent.

Asian equities ticked up, with Hong Kong’s Hang Seng index up 0.1 percent and China’s CSI 300 up 0.8 percent. Japan’s topics recorded a decline of 0.7 percent.