Fed meeting rattles markets across the world

Stocks in Europe have fallen to a two week low in light of the upcoming Federal Reserve meeting. Asian shares have declined too.

The Fed has said that it intends to keep interest rates low and it will keep it low for a while after it has finished monthly bond purchases. Its Open Market Committee will have a policy meeting on Tuesday.

However, despite claims that the Fed will not be increasing rates until 2015 the recent strong US economic performance may cause the Fed to begin increasing rates much sooner.

The Fed meeting’s impact on markets

Speculations that the Fed might increase rates has shaken markets around the world, while supporting the U.S. dollar.

The Stoxx Europe 600 Index declined by 0.3% down to 342.98. A German report revealed that investor confidence is continuing to fall for the ninth consecutive month.

Japan’s Nikkei stock average declined by 0.4 percent.

Strategists at Barclays said:

“At Wednesday’s FOMC meeting, changes to Fed forecasts and wording that reflects expectations that rates could go higher sooner than expected should provide support. We also look for a modest steepening in the median policy path and more clarity on exit principles.”

Markets across Europe are also being affected by the uncertain outcome of the Scottish Referendum, which could result in an independent Scotland.

A market analyst at CMC markets, Jasper Lawler, said the following:

“Still clouded by the prospects of an independent Scotland, markets in Europe look set for a slightly higher start ahead of UK inflation, German investor confidence and an increase in telecoms merger activity.”

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