Europe: Stocks sink after Fed news, before BOE decision

EUROPEAN equities opened sharply lower on Thursday (Nov 3) in a global selloff after the US Federal Reserve (Fed) sprang another hefty interest rate hike and hinted they could go higher than expected.

London’s benchmark FTSE 100 index dropped 0.9 per cent to 7,080.17 points, with the Bank of England (BOE) expected later Thursday to lift its key rate by the biggest amount since 1989 to combat red-hot inflation.

In the eurozone, the Paris CAC 40 plunged 1.1 per cent to 6,209.55 points and Frankfurt’s DAX index slid 0.9 per cent to 13,135.53.

“A fresh bout of volatility has reared up after the chair of the Federal Reserve chair told investors to hold their horses when it comes to expectations about lower rate rises,” said Hargreaves Lansdown analyst Susannah Streeter.

She added it was clear that “the Fed is still desperate to kick inflation into touch”.

Later Thursday at 1200 GMT, the BOE is tipped to lift borrowing costs by 0.75 percentage points, though some analysts are even predicting a full percentage point hike.

“The focus now will switch to the Bank of England’s decision today. Again, inflation is proving a tough opponent to beat so another super-size hike is widely expected,” Streeter noted. AFP