The Stoxx 600 Index dropped 0.8 per cent, paced by losses on real estate and miners. US equity futures also declined after briefly trading higher, with those on the tech-heavy and rate-sensitive Nasdaq 100 underperforming S&P 500 peers.
“The Federal Reserve is likely tightening policy straight into the teeth of a recession,” Danielle DiMartino Booth, CEO and chief strategist of Quill Intelligence, wrote in an email. “The stock market’s addiction to Fed easing when stocks decline may be what Jerome Powell is aiming to quash by aggressively hiking rates, in addition to inflation.”
Meanwhile, in a worrying trend for stocks, real rates -- Treasury yields adjusted for inflation -- rose to the highest level since 2011. When they were pinned in negative territory during a decade of easy-money policies, real rates had been a key driver of risk-asset rallies.
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