Wall Street led global equity markets lower on Thursday a day after the US Federal Reserve’s first interest rate hike in nearly a decade, as continued pressure on oil weighed on energy-related stocks.
The long-anticipated, though modest, increase in the federal funds rate boosted the dollar to a fresh two-week high against a basket of major currencies.
Brent and US crude fell and remained near multi-year lows on oversupply concerns and strength in the dollar. The oil woes helped push US equities lower after rallying on Wednesday, with the S&P energy index down 2 per cent as the worst performing of the 10 major S&P sectors.
“We are seeing some weakness but we are not seeing that hyperbolic fear that we have seen really inform the entire equity trading narrative as a result of crude’s collapse,” said Peter Kenny, equity market strategist at Kenny & Co , in Denver. “It is going to continue to be a variable that weighs on the market.”
European gains
Stocks in Europe gained, however, as investors took the Fed hike as a sign of confidence in the world’s largest economy.
The euro lost 0.6 per cent at $1.0848, exemplifying the diverging paths of the Fed and European Central Bank.
The pan-European FTSEurofirst 300 index was up 1.6 per cent by mid afternoon after climbing to a one-week high, while Germany’s DAX, France’s CAC and Britain’s FTSE 100 rose between 3 to 1 per cent. The Iseq was ahead by 1.3 per cent.
“With the Fed out of the way and only a couple of trading sessions left before Christmas, we could now see a traditional end-year rally,” Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels, said.
