European markets nervous as investors react to Fed decision, Ukraine

LONDON — European stocks are expected to plunge at the open on Thursday as global markets react badly to the latest monetary policy decision from the U.S. Federal Reserve.

The U.K.’s FTSE index is expected to open 147 points lower at 7,323, Germany’s DAX down 379 points at 15,071, France’s CAC 40 down 175 points at 6,804 and Italy’s FTSE MIB 675 points lower at 25,907, according to data from IG.

Global markets are reacting badly to the Federal Reserve’s indication on Wednesday that it could soon raise interest rates for the first time in more than three years.

The Fed’s policymaking group said a quarter-percentage point increase to its benchmark short-term borrowing rate is likely forthcoming. It would be the first increase since December 2018.

The post-meeting statement from the Federal Open Market Committee did not provide a specific time for when the increase will come, though indications are that it could happen as soon as the March meeting.  The statement comes in response to inflation running at its hottest level in nearly 40 years.

U.S. stocks initially rallied Wednesday even after the Federal Reserve pointed to an interest rate hike coming soon but overnight sentiment has changed.

U.S. stock futures fell Wednesday night; futures tied to the Dow erased earlier gains and declined 398 points, or 1.17%. S&P 500 futures and Nasdaq 100 futures slipped 1.35% and 1.57%, respectively.

Asia-Pacific markets fell across the board on Thursday overnight. Japan’s Nikkei 225 fell 3.3% while the Topix was down 2.3%. Over in South Korea, the benchmark Kospi dropped 3.13% and in Hong Kong, the Hang Seng index and the Hang Seng Tech index dropped 2.56% and 4.61%, respectively. Chinese mainland shares also declined.

Earnings in Europe come from Deutsche Bank on Thursday, as well as Unicredit, LVMH, SAP, Banco Sabadell, easyJet, Diageo and STMicroelectronics.

Renault will provides strategic update on the Nissan/Mitsubishi alliance and, on the data front, Germany’s GfK consumer sentiment figures are due.

— CNBC’s Jeff Cox, Tanaya Macheel and Abigail Ng contributed reporting to this market report.