News that the European Central Bank may be looking for a more dramatic interest rate hike next week was enough to send stock markets down. The pan-European Stoxx 600 index has shed almost one percent.
European stocks value declining
European stock markets hit their lowest level in a month. The most sensitive stocks, mainly technology ones, fell nearly 2.5 percent on Monday, while the pan-European Stoxx 600 index wrote off 0.8 percent.
Virtually all major European bourses ended in the red, but the decline in none of them exceeded one percent. Madrid shares weakened the most, by 0.92 per cent, while the Milan stock exchange erased less than a quarter of a per cent.
Combatting the inflation
The markets reacted to a statement by Isabel Schnabel, a member of the European Central Bank’s top management. Over the weekend, she said that central banks need to react strongly to rising inflation. And this even at the cost of an economic recession. Fed chief Jerome Powell also spoke similarly at the traditional meeting of central bankers in the US town of Jackson Hole, Wyoming. For equity markets, this means that they will face increasing competition from government bonds, whose yields will rise.
