► Europe’s Stoxx 600 Index witnessed a hefty 0.7% decline with most industry groups experiencing sharp losses in response to the Fed “hawkish rate pause”. Most analysts and investors had assumed that Fed Chairman Powell would be less decisive, which the markets would see as no significant change in the interest rate outlook – a misjudgement. All eyes turn now to the Bank of England's rate decision set for later today (11:00 UTC+0). The market is split whether the BoE will increase interest rates to 5.5% from 5.25% or not.
► The GBP showcased weakness as markets await the Bank of England's policy decision. The unexpected slowdown in UK inflation led to reduced expectations for further BOE tightening. Some experts are suggesting that the BOE might hint at the end of the hiking cycle even if they decide on a rate increase – similar to the ECB in the previous week – which, however, caused confusion.
► In the US, equity futures showed losses, adding to the previous Wall Street downturns. Mega-caps Apple, Amazon, Microsoft and Tesla fell by around 2%, Alphabet by as much as more than 3%, contributing significantly to the sharp declines in the S&P 500 and Nasdaq that caught many analysts and investors off guard.
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