European Stocks Close Higher after Yellen
European stock markets seesawed during the afternoon, only to close higher after investors reacted to Janet Yellen’s speech at the Jackson Hole symposium. She came across as more hawkish and equities moved higher.
The pan-European STOXX 50 was up over 0.7 percent on the day as it seesawed around 3pm London time as Yellen spoke. The FTSE 100, in London was also higher as well as the CAC 40 and German stocks each up 0.4 percent on Friday.
During her much awaited speech in Jackson Hole, Yellen was upbeat about the US economy and voiced expectations that interest rate hikes were ahead. She spoke towards market speculation of whether or not the Federal Reserve (Fed) would resume tightening which began in December 2015.
Yellen Indicates Rate Hikes Boosting Sentiment on the European Continent
Yellen was a bit cautious here but indicated more rate increases were on the foreseeable horizon. This also helped to boost US stock markets, which were higher after Europe closed.
During her speech, Janet Yellen acknowledged that “the case for an increase in the federal funds rate has strengthened” for a near term rate hike. However, most Fed officials want to see more concrete evidence of a rebound in the gross domestic product (GDP) as well as the inflation rate moving towards the two percent target. It would appear that December is the most likely month for another rate hike this year.
Numerous Fed officials gave media interviews on Thursday. Esther George, Kansas City head, said she was in favor of gradually raising rates. She is a voting member of the Federal Open Markets Committee (FOMC). Stanley Fischer, the vice-chair of the Fed, said policy members are currently debating the next moves as to policy.