European stocks plunge, heading for biggest drop in 5 weeks

European stocks plunged on Thursday, heading for their biggest drop in 5 weeks, after investors pulled out of riskier assets, including stocks and commodities. This came after the US Federal Reserve indicated that it would cut interest rates at a slower pace over the next year.

The pan-European Stoxx 600 index fell 1.2% by 08:09 GMT, with all major sub-sectors in the red.

On the other hand, US stocks witnessed their biggest daily decline in months yesterday. Although the Federal Reserve cut interest rates as expected, its Chairman Jerome Powell’s statements confirmed that any further reduction depends on further progress in reducing inflation rates.

US and European government bond yields also rose, while oil and base metals prices fell with the rise of the dollar.