European shares opened lower on Thursday after the US Federal Reserve raised interest rates by an expected 25 basis points, despite the financial crisis caused by banks on both sides of the Atlantic.
The pan-regional Stoxx 600 index was down 0.49% at the open, with all major bourses lower bar France’s CAC-40. Eyes will now be on a series of rate moves in Norway, Switzerland and the UK later in the day.
Remarks from Treasury Secretary Janet Yellen on Thursday that she is not considering “blanket insurance” for deposits, also weighed on sentiment.
“While investors have been relieved that this week has brought no new instability in the banking sector (yet), they are a little concerned by what they heard from the Fed and Treasury Secretary Janet Yellen yesterday,” said OANDA analyst Craig Erlam.
“(Fed chief) Jerome Powell and his colleagues are clearly concerned about the impact of recent events on credit conditions which may impact lending to households and businesses, slow the economy, and weigh on inflation. While this would do some of its job for it, in bringing inflation back to target, it won’t do so in the way that it will have wanted.”
“What’s more, the risks of further fallout have left investors nervous and while the Fed is not pricing in any rate cuts this year, markets very much are. We may not see those risks reflected in Fed forecasts and the dot plot but they are evident in the language used, as they were with the European Central Bank last week.”
In equity news, construction software vendor Nemetschek gained after posting higher annual profits.
Zur Rose shares fell 3.8% after the online pharmacy said it will not reach break-even in adjusted core profit this year.
Jeronimo Martins fell despite fourth quarter profits at the Portuguese retailer increasing 23%.
UK auto distributor Inchcape fell 8% despite reporting a rise in profit and providing an upbeat outlook.
Reporting by Frank Prenesti for Sharecast.com
