Mar 17, 2022 03:53AM ET
By: AnalysisWatch
European stock markets opened mostly higher on Thursday as the strong relief rally that followed the Federal Reserve's first interest rate hike in more than three years faded.
By 4:15 AM ET, the Euro Stoxx 50 was up 0.2%, while the broader Stoxx 600 was up 1.8 points, or 0.4%. They had risen 4% and 3%, respectively, on Wednesday as U.S. market activity boosted a move that began with growing hopes of a deal to end Russia's war in Ukraine. Spain's IBEX posted the biggest gains, up 0.7%, while Italy's FTSE MIB lagged and was largely unchanged. Germany's DAX rose 0.1%, while the FTSE 100 gained 0.5%.
The Fed raised its target rate by 25 basis points, as expected, and said it would raise rates at least six more times this year and continue tightening until 2023, as well as sell its bond portfolio. Some analysts doubted this optimism, as did the bond market, where the yield curve flattened significantly-a development that usually indicates a future slowdown in the economy.
European currencies rose after the Fed's actions on Wednesday, following a tough couple of weeks since the outbreak of the biggest war in Europe since 1945, an event that is likely to hit the European economy much harder than the US one. The euro rose 0.2% to $1.1051, while the pound rose 0.2% to $1.13175. Meanwhile, in Russia, the rouble continued to appreciate, rising over 3% to a two-week high of 104.27 against the dollar.