Global stocks dip after new Fed head signals quicker interest rate hikes
New Fed Chief Jerome Powell
U.S. stock markets fell during trading yesterday after Federal Reserve Chairman Jerome Powell signaled the central bank would likely raise interest rates more than 3 times in 2018.
Powell said the U.S. economy had strengthened since the Fed’s last set of economic projections in December against a backdrop of rising inflation, which some investors have taken as a signal the Fed is going to adopt a more hawkish outlook for monetary policy this year.
The Dow Jones, S&P500 and Nasdaq finished down 1.16, 1.27 and 1.23 per cent lower respectively last night, while Asian and European markets are all lower too today (see chart).
A slowdown in factory activity in China, a key market for London-listed metals producers, was also putting pressure on London’s benchmark FTSE100 index.
Today’s action has showed just how sensitive global stocks remain to the prospects of rising inflation and higher interest rates.
European markets follow Wall Street lower Wednesday on the prospect of higher borrowing costs from the world’s largest economy
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