# Stocks dip, euro volatile after ECB rate hike Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-07-21 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Global Stock Markets Dip as ECB Raises Interest Rates Meta Description: Get the latest update on global stock markets as the European Central Bank raises interest rates, impacting the euro and bond protection plans. URL: https://financedigest.com/stocks-dip-euro-volatile-after-ecb-rate-hikehtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-07-21t104720z1lynxmpei6k0g2rtroptp4britain-ftse-1736815554054-compressed.jpg) By Chuck Mikolajczak NEW YORK (Reuters) – A gauge of global stock markets lost ground after four straight sessions of gains, while the euro rose in volatile trading after the European Central Bank raised interest rates for the first time in more than a decade as it seeks to tame inflation. The ECB had for weeks flagged a 25 basis point hike, until earlier this week, when sources told Reuters the central bank was weighing a bigger move. The central bank also introduced a bond protection plan, called the Transmission Protection Instrument (TPI), that is [designed to cap the borrowing costs](https://www.financedigest.com/bmw-bets-on-design-and-recycling-not-mining-to-lower-battery-costs.html "BMW bets on design and recycling, not mining, to lower battery costs") across the region. One of the [biggest takeaways is that the ECB](https://www.financedigest.com/ecb-can-cut-carbon-footprint-by-shedding-bonds-of-biggest-polluters.html "ECB can cut carbon footprint by shedding bonds of biggest polluters") is more open-ended on their forward guidance. Previously, they suggested that they will do 50 in September and effectively 25 [basis points](https://www.financedigest.com/fed-officials-still-leaning-to-75-basis-point-rate-hike-in-july.html "Fed officials still leaning to 75-basis-point rate hike in July") per meeting thereafter. Now they are more open to do larger, smaller, [potentially no hike](https://www.financedigest.com/oil-dips-as-potential-fed-rate-hike-overshadows-falling-stocks.html "Oil dips as potential Fed rate hike overshadows falling stocks") or more hikes. I think what they want to do is [offer themselves more flexibility](https://www.financedigest.com/britain-urges-banks-to-offer-mortgage-flexibility-in-cost-of-living-crisis.html "Britain urges banks to offer mortgage flexibility in cost-of-living crisis") and not pre-commit,” said Erik Nelson, macro strategist at Wells Fargo in New York. The [ECB’s impact on the euro](https://www.financedigest.com/euro-zone-consumers-more-optimistic-on-inflation-ecb-survey-shows.html "Euro zone consumers more optimistic on inflation, ECB survey shows") will depend a lot on the transmission protection instrument… if this is a credible tool and it offers protection on peripheral bonds, then overall this could be euro-positive.” The [euro EUR= was up 0.13% to $1.019 after reaching as high as 1.0278 as the currency whipsawed after the ECB](https://www.financedigest.com/stocks-euro-gain-amid-divergent-fed-ecb-rate-hike-outlooks.html "Stocks, euro gain amid divergent Fed, ECB rate hike outlooks") announcement. The [dollar index](https://www.financedigest.com/dollar-index-jumps-after-u-s-retail-sales-show-surprise-rebound.html "Dollar index jumps after U.S. retail sales show surprise rebound") =USD fell 0.065%. The ECB also said it had approved a plan, to be published later in the day, to cap [bond yields](https://www.financedigest.com/wall-st-stocks-fall-bond-yields-rise-as-china-drops-quarantine-rule.html "Wall St stocks fall, bond yields rise as China drops quarantine rule") in an effort to help heavily indebted countries like Italy, whose coalition government fell after the resignation of Prime Minister Mario Draghi. After briefly inching higher, stocks lost ground, weighed down by a pullback in U.S. equities as a [drop in crude prices sent the energy](https://www.financedigest.com/uk-energy-regulator-drops-plan-to-ring-fence-customers-cash.html "UK energy regulator drops plan to ring fence customers’ cash") sector .SPNY sharply lower and overshadowed [gains in Tesla](https://www.financedigest.com/byd-set-to-be-chinas-top-selling-car-brand-for-nov-tesla-gains-data.html "BYD set to be China’s top-selling car brand for Nov, Tesla gains -data") .TSLA.O following its quarterly earnings. As the U.S. corporate earnings season rolls along, 91 [companies in the benchmark S&P 500 index have reported](https://www.financedigest.com/global-body-urges-eu-to-make-company-life-simpler-by-aligning-climate-reporting.html "Global body urges EU to make company life simpler by aligning climate reporting") quarterly results, with 78% topping expectations, according to Refinitiv data. That’s slightly below the 81% [beat rate](https://www.financedigest.com/beat-the-exchange-rate-and-buy-that-dream-holiday-home-by-paying-in-pounds.html "Beat the exchange rate and buy that dream holiday home – by paying in pounds! ") for the past four quarters but well above the 66% rate since 1994. The Dow Jones Industrial Average .DJI fell 240.63 points, or 0.75%, to 31,634.21, the S&P 500 .SPX lost 13.56 points, or 0.34%, to 3,946.34 and the Nasdaq Composite .IXIC dropped 22.93 points, or 0.19%, to 11,874.72. U.S. [economic data](https://www.financedigest.com/oil-slumps-on-economic-data-stronger-u-s-dollar.html "Oil slumps on economic data, stronger U.S. dollar") was also on the soft side with weekly initial jobless claims touching a fresh 8-month high and a gauge of factory activity in the mid-Atlantic region for July hitting its lowest in slightly over two years. The [data comes ahead of the Federal Reserve’s policy meeting next week](https://www.financedigest.com/dollar-dips-ahead-of-inflation-data-later-this-week.html "Dollar dips ahead of inflation data later this week"), in which it is largely expected to hike rates by 75 basis points. Benchmark 10-year [notes US10YT=RR last rose 26/32 in price](https://www.financedigest.com/uk-house-prices-end-2022-on-a-weaker-note-after-pandemic-boom.html "UK house prices end 2022 on a weaker note after pandemic boom") to yield 2.9411%, from 3.036% late on Wednesday. The pan-European STOXX 600 index .STOXX rose 0.16% and MSCI’s gauge of stocks [across the globe](https://www.financedigest.com/germany-u-s-agree-to-new-covid-curbs-as-omicron-spreads-across-globe.html "Germany, U.S. agree to new COVID curbs as Omicron spreads across globe") .MIWD00000PUS shed 0.23%. The Japanese [yen strengthened 0.11% versus the greenback to 138.06 per dollar](https://www.financedigest.com/yen-sinks-as-rates-outlook-diverges-nz-dollar-tumbles.html "Yen sinks as rates outlook diverges; NZ dollar tumbles") as the Bank of Japan remained an outlier among central banks and left its super-loose monetary policy unchanged on Thursday, as expected, and raised its inflation forecasts slightly. Sterling GBP= was last trading at $1.1938, down 0.26% on the day. [Oil prices](https://www.financedigest.com/shares-fall-with-oil-prices-amid-concerns-about-u-s-fed-rate-hikes.html "Shares fall with oil prices amid concerns about U.S. Fed rate hikes") declined for a second straight session, after higher U.S. gasoline stockpiles and an ECB [rate hike](https://www.financedigest.com/wall-street-slips-dollar-gains-as-fed-seen-hiking-rates-in-may.html "Wall Street slips, dollar gains as Fed seen hiking rates in May") heightened demand worries and returning oil supply from Libya eased supply concerns. ( U.S. crude CLc1 recently fell 3.74% to $96.14 per barrel and Brent LCOc1 was at $103.79, down 2.93% on the day. (Additional replorting by Gertrude Chavez-Dreyfuss; Editing by Bernadette Baum) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---