Global markets are plunging as the Fed's 'hawkish tone' steals Christmas

Spencer Platt/Getty Images

  • Global stocks fell sharply after the Federal Reserve raised interest rates and said monetary-policy tightening would continue in 2019.
  • Investors had been hoping the Fed and Chairman Jerome Powell would be explicitly dovish in their communications but were left disappointed by the central bank’s tone.
  • It was a sea of red: Stocks in the US, Europe and Asia are all sharply lower on Thursday.
  • Soon after the US open the S&P 500 was 0.8% lower, while the Dow Jones has dropped 0.9%
  • Almost all major European indexes were lower by 1.5% or more. The Euro Stoxx 50 reached a 2016 low.
  • You can follow the latest market moves at Markets Insider.

Stock markets around the world were tumbling Thursday after the US Federal Reserve dashed hopes that it would approach 2019 with a more dovish policy outlook.

The central bank’s Federal Open Market Committee unanimously voted to raise the fed funds rate by 25 basis points to a range of 2.25% to 2.5% on Wednesday, and it said it expected to continue raising rates in 2019, though at a slower pace than the four rate rises this year.

Investors had been hoping the Fed and Chairman Jerome Powell would be explicitly dovish in their communications but were left disappointed by the central bank’s tone.

“Investors were expecting a more dovish tone from Powell given the sharp fall in equity markets and challenging global macroeconomic conditions,” Hussein Sayed, the chief market strategist at FXTM, said in an email Thursday morning. “All they got was a less hawkish tone.”

“Despite many signs of global economic growth slowing, the Fed does not seem to be very concerned at this stage suggesting that monetary policy will continue to tighten albeit at a slower pace than previously projected,” he continued.

“What appeared to be even more concerning to equity investors is that Powell is not only ignoring Trump’s calls to pause the tightening cycle, but he is also not listening to them.”


Read more:
Here’s how the Fed raises interest rates and why it matters

Markets were a sea of red Thursday, with US, European and Asian stocks selling off sharply.

Here’s the scoreboard as of 9.50 a.m. ET:

  • US stocks are off to a bad start. The S&P 500 is down 0.8% adding to its 1.5% drop on Wednesday, while the Dow has opened 0.9% lower. The Nasdaq is seeing the smallest losses, down around 0.45%.
  • Almost all major European indexes are lower by close to, or more than, 1.5%. Germany’s DAX is off 1.5%, while Spain’s Ibex 35, the biggest faller, is 2.1% down. The benchmark Euro Stoxx 50 has reached a 2016 low.
  • Asian equities were red across the board, with Japan’s Nikkei 225 the biggest casualty, losing 2.8% of its value.
  • Chinese stocks were a little stronger, most likely boosted by news that Beijing had resumed purchases of US soybeans. The Shanghai Composite, China’s benchmark index, was down 0.52%.
  • Oil prices slumped on worries of slowing global growth. Brent crude tumbled 3.9%.

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