The Fed’s next interest rate decision will steer the stock markets. Interest rate hikes are also expected in Switzerland and Great Britain. Details on the Porsche IPO published.
September 19, 2022. Frankfurt (Frankfurt Stock Exchange). The abrupt change in mood on the stock market last week after unexpectedly weak US inflation data is likely to continue for the time being. Commerzbank expects price pressure at least until the middle of the week. Then the key rate decision by the US Federal Reserve should determine the course. “The increasingly restrictive monetary policy, especially in the USA, remains a risk for the stock markets,” says Martin Hartmann.
On Friday, the DAX fell by 1.7 percent and ended trading at 12,741 points. On Monday, a lighter start is indicated with 0.2 percent. The London Stock Exchange remains closed today for the funeral of Queen Elizabeth II.
The key interest rate decision in the USA on Wednesday is considered to be the most important event. With inflationary pressures remaining high, some market participants are anticipating the Fed could hike rates by 100 basis points. There is speculation as to how extensively the Fed will raise interest rates: “The interest rate speculation is now well over 4 percent for the first quarter of 2023,” comments Hartmann. The US labor market needs to cool down: the lack of workers is driving wage increases, which largely determine the longer-term inflation outlook.
Europe: weaker economic data and rising interest rates expected
While European economic data such as the purchasing managers’ indices for the euro zone and Germany are again expected to be weaker, further interest rate hikes are due in Europe this week. The Bank of England will hold its meeting on Thursday, which was postponed due to the death of Queen Elizabeth II, and is expected to raise interest rates by 50 basis points. On the same day, the Swiss central bank SNB and the Norges Bank in Norway are likely to decide to raise interest rates at the same rate, while the Bank of Japan is likely to stick to its expansive monetary policy.
Stock markets remain volatile
“It is not yet clear when and at what level the last step on the rate hike staircase will be taken for both the Fed and the ECB,” says Ulrich Kater from DekaBank, describing the situation. Most of the rise in interest rates is probably behind us. The remaining uncertainty will probably continue to be accompanied by persistently high fluctuations on the stock and bond markets in the coming weeks. “However, overcoming the inflation and energy crisis is on the right track. This means that there are again constructive prospects for securities investments in the direction of the coming year.”
