Another day, yet another scare for the already struggling European economy, as stocks closed lower on Thursday after the BOE attempted to stabilize the market.
Europe’s Stocks Slide Again
Reports indicate that the pan-European platform, Stoxx 600, is down 1.8%, with automotive stocks leading the slumps with 5%. This implies that the significant market has since slid into the negative zone.
Meanwhile, Europe’s primary resource sector is the only one that has gained, with a 0.5% uptrend.
Furthermore, the Pound Sterling spiraled to its lowest level against the USD over the past few days and continued the trend on Thursday. As a result, Sterling traded below $1.08 on Thursday morning before experiencing a sudden recovery to roughly $1.095.
Wednesday was unfavorable to the global market as the sector experienced a volatile trading session. Stocks trade steeply lower as the world market enters a sell-off amid growing inflation concerns and uncertain economic growth.
On the other hand, the United Kingdom is still swimming in the market heat as the Bank of England (BOE) halted its gilt selling for next week. In addition, the BOE has begun to purchase long-dated bonds in a move to
bring calm to the market, which was triggered by the so-called “mini-budget” of the newly elected government.
It has a spillover effect on the U.S. market as it helps stabilize the overbearing stocks’ futures. However, the impact started fading as stocks inched lower during the premarket session on Thursday.
Turkey Considers Cutting Interest Rates
Amid soaring inflation, the president of Turkey, Recep Tayyip Erdogan, has announced plans to continue cutting down on interest rates. The president noted that the central bank would not raise the interest rate soon.
The monetary authority echoed the president’s sentiments by adding that the country’s key rate, currently at 12%, is expected to hit single digits by the year’s end.
Erdogan could not resist throwing a jibe at the U.K.’s pound amid worsening economic woes. The Turkish leader says the British pound has “blown up” as the U.K. attempts to steady the sinking ship.
Meanwhile, policymakers worldwide, including the International Monetary Fund (IMF), revealed that the U.K.’s economy is exhibiting the symptoms of a developing market.
Even the Turkish national currency, the Lira, has hit a low against the USD, trading at 18.549 on Thursday. Meanwhile, the currency has shed more than 28% of its value against the U.S. dollar in 2022 and 80% over the past five years. The international market continues to shun Erdogan’s unorthodox monetary strategy of cutting interest rates.
The president has consistently defended his controversial monetary policy by saying that rising interest rates are the enemy and that 12% is insufficient and needs to be reduced further.
He added that he has discussed this with the central bank and suggested more interest rate cuts. Turkey is currently hit by its highest inflation in over 24 years as living costs continue to skyrocket.
Experts expect the Lira to fall further as the country prioritizes growth over addressing inflation.
