US rate jitters continue to weigh on global stocks
LONDON (AP) — Global stock prices fell sharply Thursday after Wall Street plunged in the wake of some fairly hawkish commentary from the Federal Reserve about future U.S. interest rate increases. However, many European indexes have come off their lows amid hopes that the U.S. will open slightly firmer later.
KEEPING SCORE: In Europe, France’s CAC 40 index was down 1.3 percent to 4,715 while Germany’s DAX dropped 0.9 percent to 10,675. London’s FTSE 100 was down 0.2 percent at 6,754. All three European indexes were above earlier levels largely because U.S. stocks were poised to recoup some ground at the bell — Dow futures and the broader S&P 500 futures were up 0.3 percent.
FED WATCH: Investors have had another bout of jitters in what is turning into a disappointing end of year for global stock markets, which has seen many indexes enter bear-market territory. The latest concerns centered on the Fed, which on Wednesday raised its key interest rate for a fourth time this year to reflect U.S. economic strength and said it plans more increases next year. That lifted the Fed’s benchmark rate to its highest level since the 2008 global financial crisis. The Fed said it expects two rate increases next year instead of three. Investors were disappointed Chairman Jerome Powell failed to go further in indicating a slowdown in the pace of increases. The Dow and S&P 500 both lost 1.5 percent on Wednesday while the Nasdaq dropped 2.2 percent.
ANALYST TAKE: “European indices played catch-up with yet another bruising session in the U.S.,” said Chris Beauchamp, chief market analyst at IG. “Since then however there has been a flurry of buying, as might be expected following such a rout.”
ASIA’S DAY: Tokyo’s Nikkei 225 lost 2.8 percent to 20,392.58 after being down 3.2 percent at one point. The Shanghai Composite Index retreated 0.5 percent to 2,536.27 and Hong Kong’s Hang Seng gave up 1 percent to 25,615.85. Seoul’s Kospi shed 0.9 percent to 2,060.09 and Sydney’s S&P-ASX 200 declined 1.3 percent to 5,505.80.
CHINA LENDING: Beijing unexpectedly announced a 100 billion yuan ($15 billion) lending program to support entrepreneurs. Financial analysts said the “targeted easing” appears to be aimed at shoring up economic growth without reigniting a rise in national debt levels.
JAPAN INTEREST RATES: Japan’s central bank, as was widely expected, left its short-term policy rate unchanged at a negative 0.1 percent and its 10-year bond yield target at 0 percent. The bank’s economic outlook was optimistic but said it would keep rates “extremely low” for an extended period.
ENERGY: Oil prices fell again after a brief respite on Wednesday. Benchmark U.S. crude fell $1.69 to $46.48 a barrel in electronic trading on the New York Mercantile Exchange while Brent crude, used to price international oils, retreated $1.95 to $55.29 per barrel in London.
CURRENCY: The euro was up 0.7 percent at $1.1458 while the dollar declined 0.7 percent to 111.70 yen.