Pre-market Update: Global Stocks Tumble on Aggressive Fed Policy

The Federal Reserve raised interest rates by a quarter point yesterday, as expected.  However, investors became gloomy as the accompanying statement heralded the end of the accommodative policy that has buoyed asset prices for nearly a decade.

This could well mean the Fed will raise interest rates well into next year.  Moreover, the Fed could even accelerate its hiking process by raising rates by increasing the increments of its rate hikes.

This statement sent US markets tumbling yesterday and has spilled over into global stocks today.  A couple of the notable moves across Asia today:

  • Japan’s NIKKEI 500 Index tumbled 1.52%;
  • The Shanghai Composite Index is down 0.54%;
  • Hong Kong’s Hang Seng Index fell 0.36%;
  • South Korea’s KOSPI Index is up 0.70%;
  • India’s SENSEX Index fell 0.66%.

European stock markets are slightly lower.  A look at some of Europe’s top indices shows:

  • London’s FTSE Index is trading sideways;
  • The German DAX Index is down 0.54%;
  • The French CAC 40 Index fell 0.33%  at the open.

European stock markets will continue to focus on issues within their own markets such as the Brexit negotiations and the Turkish Lira Crisis.  Additionally, European investors are keeping a close eye on developments in Italy as investors have become fearful of potential anti-EU measures by the new government.

US Futures Are Trading Sideways in Pre-Market Action

The U.S. stock market is not moving strongly in either direction in pre-market trading.   The NASDAQ futures are up 0.14% and the S&P 500 futures are flat.

Investors will continue to take their cues from the news cycle heading.  Accordingly, any new developments in the Trump legal morass or global trade disputes could see it drive markets in either direction.

See more of our analysis here.

 

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Al Basoglu

I am a financial services professional with over a decade of experience in various roles. I've lived and worked abroad in 5 different countries while pursuing personal and professional challenges. My interests include markets, history and different cultures. I tend to weave all of my interest into my analysis and articles.