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Stocks slide post Fed

Equity markets in Europe are in the red this morning after the Federal Reserve raised interest rates last night.

The Fed are planning on reducing the number of assets they have on their balance sheet later this year. The US central bank lowered its forecast for inflation and raised its prediction for growth. Traders were hoping the falling inflation rate in the US would prompt the Fed to be more dovish in their stance, but when Fed Chair Janet Yellen reduced her CPI guidance to 1.6%, traders realised they couldn’t just depend on declining CPI to justify their previously bullish stance on stocks.  

DFS Furniture shares plummeted on the open after the company issued a profit warning. Footfall at their stores has declined, and orders are declining too. The British consumer is being squeezed by the higher cost of living and weak wage growth, and bigger ticket items like sofas, are in less demand.

Randgold Resources and Fresnillo are lower on the day as the underlying gold and silver markets are weaker after the Federal Reserve increased interest rates last. The US central bank also stated it would begin to reduce the size of its balance sheet this year.

The GBP/USD has fallen after the UK revealed disappointing retail sales figures. The May report showed a fall of 1.2%, while the market was anticipating a drop of 0.8%. On the bright side, the April figures was revised higher to 2.5% from 2.3%. Between the CPI, average earnings and now the retails sales, it has not been a good week for sterling.

We are expecting the Dow Jones to open 70 points lower at 21,307, and we anticipating the S&P 500 to open at 2425, down 12 points. There are several economic announcements expected from the US today. Jobless claims, empire manufacturing, and the Philly Fed manufacturing will be announced at 1.30pm, while industrial production will be revealed at 2.15pm.  

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Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.