Europe open: Shares open lower as Fed turns hawkish on rates

The pan-European Stoxx 600 index was down 0.4%, with the UK’s FTSE 100 down 0.66%. US markets closed lower overnight as the US central bank said two possible rate rises could be implemented by the end of 2023.

“The bond market reaction was a little sharper with 10-year yields pushing back towards the 1.6% level, putting them back where they were at the beginning of last week, while the 2-year yields shot up to a post pandemic high above 0.20%,” said Michael Hewson at CMC Markets.

“This reaction may serve as a useful reminder that while central banks may seem fairly relaxed about the inflation outlook, they still have to look a lot further out, and realistically if the economy improves as expected, monetary policy will have to change.”

“The fact that the Federal Reserve are slowly preparing the ground now may well be unsettling for markets but it is also necessary, and in the here and now, monetary policy still hasn’t changed that much.”

In equity markets, shares in online train and coach ticket platform Trainline topped the Stoxx after reporting a 324% rise in first quarter sales as commuter travel started to recover as Covid lockdowns eased.

Premier Inn owner Whitbread was also higher as it held guidance and forecast strong UK summer demand, despite a slump in sales growth and extension of the UK government’s lockdown by a month.

Mining stocks were lower as the gold price fell, with Glencore, BHP, Anglo American and Antofagasta all down.