Swiss stock market expected to dive after US interest rate decision
Published: Thursday, Dec 19th 2024, 08:30
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The Fed's interest rate decision is likely to send the rest of the world's stock markets tumbling after the US markets. A dip is also expected on the Swiss stock exchange.
As expected, the US Federal Reserve lowered the key interest rate again by 0.25 percentage points the previous evening. However, it also lowered its expectations for further interest rate hikes. This caught investors on the wrong foot and sent US equities and bond markets plummeting.
The Dow Jones slumped by 2.6 percent and the Nasdaq technology exchange fell by as much as 3.6 percent. After the records that have been repeatedly set since the beginning of November, many investors on the financial market fled risk assets.
The European markets are also unlikely to be able to escape this negative trend. According to pre-market indications, the leading Swiss SMI index is expected to fall by 1.2 percent. Germany's leading index, the Dax, is seen 1.3 percent lower.
The US Federal Reserve had predicted fewer interest rate cuts for the coming year than previously due to stubbornly high inflation. At the same time, Fed Chairman Jerome Powell emphasized that it was still too early to include the economic measures announced by future US President Donald Trump in the predictions. "It's very premature to try to draw any conclusions," Powell said with regard to the far-reaching tariffs that the Republican is threatening.
Dollar gains
The US dollar also reacted to the Fed's statements and rose above the 90 centime mark against the franc for the first time since the summer. However, the greenback recently traded slightly below this level again at 0.8998 francs.
Meanwhile, the euro weakened further against the dollar to 1.03812 dollars. Shortly before the Fed chief's statements, it had still cost almost 1.05 dollars. Gold also recovered some of its recent losses.
©Keystone/SDA
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