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Global Markets Follow Wall St.’s Slide After Fed’s Move on Rates Global Markets Follow Wall St.’s Slide After Fed’s Move on Rates
(35 minutes later)
Global markets on Thursday echoed Wall Street’s drop from the day before, and central banks were the most likely culprit. Stocks extended their run of losses Thursday, as investors reacted with disappointment to decisions from central banks around the world.
Japanese investors led their counterparts around the world in mirroring Wall Street’s disappointment in the actions the Federal Reserve took on Wednesday. The Fed, as expected, raised its benchmark interest rate one-quarter of a percentage point and signaled that it would continue to raise rates next year. On Wall Street, the S&P 500 was down in early trading, adding to a decline that has wiped more than 9 percent off the benchmark just this month.
The Bank of Japan added to investors’ negative mood on Thursday by maintaining its monetary policy, despite hopes that it would offer some form help for an economy contending with a slowing global outlook. The Bank of England announced it would keep its benchmark interest rate steady at 0.75 percent, and noted that concerns over Brexit are increasingly weighing on the British economy. Investors had been looking for the Federal Reserve to indicate that it would moderate the pace of monetary tightening because of growing concern about the economic outlook. Instead, the Fed increased rates by a quarter-point on Wednesday and said it will keep doing so while also shrinking the extraordinary amount of support it has provided to financial markets. The Fed cited the strength of the United States economy, which has remained healthy even as global growth shows signs of slowing.
On Wall Street, futures trading pointed to a small decline. On Thursday, the Bank of Japan fueled investors’ negative mood by maintaining its monetary policy, despite hopes that it too would offer some form of help for an economy that is contending with a slowdown. The Japanese economy contracted in the third quarter.
The Bank of England then announced it would keep its benchmark interest rate steady at 0.75 percent, and noted that concerns over Brexit are increasingly weighing on the British economy.
Shares in Japan led the decline in Asia, with the Nikkei 225 index down 2.8 percent after the Japanese central bank’s comments. Another closely watched Japanese stock index, the Topix, fell into bear market territory, meaning it is now down 20 percent from its peak.
In Britain, the FTSE 100 was down about 0.2 percent in early afternoon trading. Stocks in France and Germany were down about 1 percent.In Britain, the FTSE 100 was down about 0.2 percent in early afternoon trading. Stocks in France and Germany were down about 1 percent.
Oil prices returned to their lows for the year.Oil prices returned to their lows for the year.
In Tokyo, the Nikkei 225 Index fell 2.8 percent after the Bank of Japan’s comments. Another closely watched Japanese stock index, the Topix, fell into bear market territory, meaning it is now down 20 percent from its peak.
Other Asian markets did not drop as much.