European Stocks Dropping After US Fed Bullish Remarks

European stocks slipped and the dollar strengthened on Thursday after the Federal Reserve took an upbeat view of the world’s largest economy and signaled it was on track to raise interest rates this year.

The stronger dollar helped push U.S. oil prices to six-year lows and weighed on the price of gold.

Greece, where an anti-austerity prime minister took over on Monday, also kept investors nervous, although Greek shares regained some ground after falling 9.2 percent on Wednesday.

The Fed, after a two-day policy meeting, said it would be “patient” and would take international developments into account in deciding when to raise borrowing costs. Some saw that as indicating any rate increase could be delayed.

U.S. shares, which closed lower on Wednesday after the Fed statement, with energy stocks weakening, were set to open modestly higher, according to stock index futures. SPc1 DJc1.

German government bond yields fell, as did U.S. Treasuries, on this dovish view. U.S. 30-year bond yields US30YT=RR reached a record low on Wednesday. Concern over Greece, whose new government opposes the terms of Greece’s international bailout, also boosted demand for low-risk debt.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza