Europe and US markets shrug off plunge in Chinese stocks and possible Fed hike

Chinese stocks fell again on Tuesday, the Shanghai Composite Index plunging 3.5 percent. It had fallen 2.7 percent on Monday.

However, markets elsewhere mostly shrugged off the fall in China. In Europe, the STOXX Europe 600 rose 0.8 percent while in the US, the S&P 500 rose 1.3 percent.

Investors in the US were possibly more focused on a possible interest rate hike by the Federal Reserve on Thursday.

However, the WSJ MoneyBeat blog says that while historically, stocks tend to be volatile around increases in interest rates, equities typically do well during the tightening cycle and a year after the initial rate rise.

Citing data from BMO Capital Markets, MoneyBeat says that since 1982, there have been seven tightening cycles. In each case, the S&P 500 was higher a year after the initial rate increases. On average, the index rose 6.4 percent in the 12 months following the rate hike.