Global Stocks Slipped after the Fed’s Announcement

Nikkei, the leading index of the Tokyo Stock Exchange, declined by 0.93% this Thursday. It followed the Federal reserve’s announcement about its plan to increase interest rates earlier than expected. 

Nikkei, which groups the 225 most representative titles in the market, dropped by 272.68 points, to 29,018.33.

Meanwhile, the Topix index, including firms with the highest capitalization, yielded 0.62% or 12.29 points, to stand at 1,963.57.

According to Shoichi Arisawa, a general manager of the investment research department stated that investors are exaggerating the US central bank’s announcement. He expects Wall Street’s another fall since the stock market might not have wholly digested the news. 

 

Japanese Yen limited the stock market losses 

The losses in the Japanese market were limited by a change in the yen, which is favorable to domestic exports.  

The services sector recorded the main setbacks of the day. Precision instruments and pharmaceuticals followed it. 

Komatsu, the manufacturer of machinery for construction, posted the most significant fall among the companies that are listed in the Nikkei. It declined by 5.24%%. The pharmaceutical company Chugai followed it by a drop of 3.74%. Meantime, M3, the provider of medical services through the internet, sank by 3.61%.

The SoftBank group’s shares depreciated by 1.39%.

As for Nintendo, the video game developer advanced by 1.18%, recovering part of its losses the day before. Likewise, Lasertec, the electronic components maker, climbed by 2.16%.  

In the first section, 1,409 companies’ shares declined against 673 ones that posted advances. Meanwhile, 111 equities closed unchanged. 

The trading volume of the session amounted to 2.28 trillion yen. 

 

Europe opened lower following the Wall Street

European shares retreated from record highs on Thursday. It followed the overnight decreases on Wall Street because of the Federal Reserve’s indications about tapering its massive stimulus earlier than expected. 

The pan-European Stoxx 600 index declined by 0.4%. Meanwhile, the UK’s FTSE 100 yielded 0.66%. 

Michael Hewson from CMC Markets stated that the market reaction was a helpful reminder that the central banks still have to look a lot further despite being relaxed. Also, if the economic condition continues improving, central banks will have to change their monetary policy. 

The analyst also noted that Fed’s preparation might be unsettling for the markets; however, it is also necessary. 

 

London shares sank in the early trading

After the Fed’s comments, London shares dropped at the beginning of the trading day on Thursday. 

FTSE 100 decreased by 0.39% to 7,156.95. FTSE 250 yielded 0.15% to 22,583.96. Meanwhile, techMARK lost 0.18% to 4,483.75.

Trainline shares surged after reporting a 324% increase in the first-quarter sales after easing the coronavirus-induced lockdowns. 

The financial sector profited well, and personal banking companies such as NatWest, HSBC, Barclays, and Lloyds posted increases. 

Whitebread, a multinational British hotel and restaurant company, Premier Inn owner, also rallied. The company led the gains by surging 4.07% to 3,424.00. Even though the British government extended the lockdowns by a month, the company forecasted strong demand in coastal destinations in summer. 

However, reports implied that fully vaccinated citizens could be exempt from quarantine. It prompted travel and leisure stocks to grow. Among the day’s winners were British Airways, IAG, EasyJet, Wizz, Tui, Carnival, SSP, Rolls-Royce, InterContinental Hotels, and WH Smith. 

As for the losses, the mining sector registered the most significant decreases because metal prices dipped. There were Glencore, BHP, Anglo American, and Antofagasta among the companies with reductions. 

 

Hitachi plans to invest $2.7bn in healthcare

Hitachi, a Japanese multinational conglomerate company, intends to invest $2.7 billion in research and development in the medical and healthcare sector. Recently, the company invested in a startup concentrating in biomedicine. 

 

Wall Street closed in red after the Fed’s decision

Wall Street closed Wednesday in red. The Dow Jones, its main indicator, decreased by 0.77% after the Federal Reserve raised its inflation estimates and advanced the subsequent interest increases to 2023. 

The Dow Jones decreased by 94.42 points, or 0.3%, to 34,299.33.

Meanwhile, The S&P 500 lost 0.2% or 8.56 points, to 4,246.59.

The Nasdaq Composite Index, listing the main technology companies, dropped by 0.7%, or 101.29 points, to 14,072.86.

Jerome Powell, the Fed Chairman, stated at a news conference that inflation had exceeded expectations. The central bank left its benchmark policy rate unchanged between 0% to 0.25%. Powell noted that the Fed would keep buying $120 billion of bonds monthly until tangible progress had been made concerning employment and inflation. 

4 of the Fed governors expected interest rate hikes as early as 2022. This time, their number went from four to seven. 

Seema Shah, a chief strategist of Principal Global Investors, stated that there still will be worries about tapering. However, it is up to Powell and Fed speakers to reassure the market.

 

Most of the sectors dropped in their value

Public service companies led the losses with a slump of 1.49%. Essential goods followed them by the loss of 1.24%, and the value of basic materials companies dropped by 1.17%.

As for the Dow Jones stocks’ decreases were led by Dow Inc, which yielded 2.42%. At the same time, Walmart lost 2.04%, 3M decreased by 1.84%, and Boeing fell by 1.73%.

So far, the stock market has been trading in greet, believing that higher inflation in the recovery phase would be temporary. However, the investors are worried that the central bank will be forced to reduce its bond-buying program sooner than projected. 

The Fed tried to assure markets by mentioning consumer prices and wholesale levels, rising steadily in the country.

 

Highlights

Wall Street shares ended in mixed territory with Dow Jones yielding 0.62%, S&P 500 losing 0.04%, and the Nasdaq adding 0.87%.
Asian shares traded almost flat, with the MSCI AC Asia Index adding a slight 0.01%. Hang Seng added 0.53% while Chinese blue-chip stocks dropped by 0.1%. The Shanghai Composite index closed flat.
Nikkei plummeted by 0.19%.
European shares point to declines; Stoxx 600 is trading flat; FTSE 100 down by 0.25%.
In the Indian stock market, Sensex contracted by 0.34% while Nifty ended with a loss of 0.48%.
Kospi rebounded by 0.09% in hopes of economic recovery.