Stock exchanges Europe calm for interest rate decision vs; British inflation is falling further

The European stock markets open with small shifts. Investors remain nervous because of the war in the Middle East and look forward to the interest rate decision of the US Central Bank later today.

Investors hope for Powell’s clarity

The German Dax today notes 0.1 percent in the minus, while the French CAC is 40 0.2 percent higher. In London, the FTSE 100 is currently 0.1 percent in the Plus. The stock markets therefore seem to await the developments in the Middle East and the monetary policy of the FED for the time being.

Trump is pressing Iran

The war between Israel and Iran now lasts six days and the fear of further escalation is growing. The Wall Street Journal reported that US President Trump consulted about possible attacks on Iran. Trump also demanded “unconditional surrender” from Tehran and warned that “the patience of the US is almost gone”. Tensions press on sentiment, because investors fear that other countries in the region can be involved.

In the meantime, the market is also focusing on the Fed, which will come up with an interest rate decision tonight. The interest is expected to remain unchanged, but investors mainly listen to the explanation of chairman Powell. The financial markets are still counting on two interest rates before the end of the year. But whether that expectation holds depends on the tone of the Fed. Certainly now that signals are increasing that cools down the US economy.

British inflation is falling slightly in May

In the United Kingdom the news came today that inflation in May cooled to 3.4 percent on an annual basis. That was a slight decrease compared to April. Especially the increase in services for services fell back, from 5.4 percent to 4.7 percent, exactly what the Bank of England had predicted.

The Central Bank is expected to leave the interest again on Thursday, after the earlier reduction to 4.25 percent in May. Analysts assume that two small interest rates will follow this year.

The oil prices fell slightly after the sharp rise on Tuesday. Brent recorded 0.1 percent lower at $ 76.38 per barrel. The American WTI oil dropped to $ 73.21. Investors follow the oil supply through the Strait of Hormuz, the narrow passage between the Arabian Peninsula and Iran, because of the risk of disturbances.