Fed Hikes Rates for First Time Since 2023, Spanish Markets Feel the Pinch

The Federal Reserve has raised interest rates for the first time since 2023, putting pressure on Spanish markets. The IBEX 35 and euro have already been struggling due to weeks of losses and global uncertainty.

The Fed cited persistent inflation and strong labor market data as reasons for the rate hike, which is 25 basis points. This decision comes as a surprise to no one, with traders largely expecting it ahead of the meeting.

The IBEX 35 has dropped more than 2% in the past month, closing at 19,555.90 points on September 15. Banks and cyclical stocks are expected to be hit hard by this decision, as they are sensitive to tighter financial conditions.

The euro is also feeling the pressure, trading near its monthly low of 1.1534 against the dollar. Institutional investors have increased their net short positions in euro futures, showing little faith in a quick rebound.