Financial markets seem to have found its stability after being buffeted by the Federal Reserve rate hike expectations.
Global shares recovered from over a month dip and commodity prices rebounded. The yen weakened on reduced demand for safe haven assets as investors adjusted their positions amid BOJ uncertainty.
Energy and raw materials companies led the gains on the Stoxx Europe 600 Index as crude rose to a seven month high, while copper surged from levels last seen in February. The pound lost the most after an official of the Bank of England suggested the economy may need additional stimulus even if June 23 referendum vote was positive.
Since FOMC meeting, almost $900 billion has been wiped off the value of global shares in the last three days, as traders are said to have increased their bets on a June rate hike in the U.S.
“After the losses of the last few days, bargain hunters are re-entering the market,” said Thorsten Engelmann, a Frankfurt-based trader at Equinet Bank. “The market seems to be able to deal with the Fed raising rates, and next week should be quieter now that the earnings season is over.”
Even though, the American economy is showing signs it can sustain higher borrowing costs, global outlook is still weak and could impact the overall result of central bank policy.
