European and Asian markets were mixed during Thursday trade as investors digested the decision by the US Federal Reserve to raise its main interest rate by 25 basis points in a bid to bring down inflation.
European markets opened lower, with the region’s benchmark Stoxx Europe 600 index falling 0.9% in late-morning trading. Germany’s DAX
(DAX) dropped 0.8%, while France’s CAC 40
(CAC40) fell 0.7%. London’s FTSE 100
(UKX) slid back 1.1%.
Europe’s Stoxx Europe 600 Banks index, which tracks 42 big EU and UK banks, dropped 0.9% late morning, after a rollercoaster two weeks for the banking sector following the collapse of two US lenders.
“With the banking sector not out of the woods and central bank and US treasury officials still on edge, uneasy about what may lie ahead, a sense of nervousness is still hanging over the markets,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, said in a Thursday note.
But in Hong Kong, the benchmark Hang Seng
(HSI) index closed 2.3% higher, leading gainers in Asia. One of the top gainers was internet giant Tencent, which ended the day up 8.2% after reporting a strong rise in its online advertising business in the December quarter on Wednesday.
In Japan, the Nikkei 225
(N225) closed 0.2% lower. The broader Topix index finished down 0.3%. South Korea’s Kospi was 0.3% higher, while Australia’s S&P ASX 200 closed 0.7% lower.
Asian shares had opened broadly lower, tracking losses on Wall Street. In the US, the Dow closed 1.6% lower on Wednesday, while the S&P 500
(DVS) slipped about 1.7%. The Nasdaq Composite declined 1.6%.
“Looking ahead, while we see fundamental value in Asia-ex Japan stocks … we remain concerned about a possible pullback in US stocks assuming US data deteriorates in the months ahead,” Nomura analysts wrote in a Thursday research note.
But US futures were trading higher in pre-market trade on Thursday, with the Dow up 0.1%, the S&P 500 up 0.4% and the Nasdaq Composite 0.9% higher.
US markets had been fickle on Wednesday before settling in the red as investors digested the Fed’s quarter-point rate hike and looked for clues about the state of the banking sector meltdown.
The Fed raised rates even though its historic rate hiking campaign was a contributing factor in the current banking crisis.
But investors were heartened by the central bank’s strong hints that the aggressive pace of its interest rate hikes would end soon. Still, the Fed also warned that rate cuts weren’t coming this year.
— CNN’s Krystal Hur and Laura He contributed reporting.