A roundup of trading on major world markets:
NEW YORK – US stocks have fallen sharply in the wake of the Federal Reserve’s decision against raising interest rates because of worries about slowing global economic growth.
On Friday, The Dow Jones industrial Average dropped 289.95 (1.74 per cent) to 16,384.79.
The broad-based S&P 500 sank 32.12 (1.61 per cent) to 1,958.08, while the tech-rich Nasdaq Composite Index lost 66.72 (1.36 per cent) at 4,827.23.
Analysts said the Fed’s decision on Thursday to keep benchmark rates at zero was concerning because it implied that headwinds facing the global economy are stronger than thought.
Also, the US central bank’s failure to act despite previously suggesting a rate rise was imminent left investors uncertain of the outlook for US monetary policy.
“The fact that the Fed did not raise rates prolongs the uncertainty and the stock market does not like uncertainty,” said Bill Lynch, director of investment, Hinsdale Associates.
“We just face more of the same in terms of this waiting game as to when they’ll finally pull the trigger.”
LONDON – The Federal Reserve’s decision to hold interest rates steady exposed a gulf in global stocks, with European shares slumping and emerging markets jumping.
The Fed’s decision spooked advanced countries worried about the outlook for the global economy.
“Leaving US interest rates at rock bottom could mark a turning point for the relative performance of emerging and developed markets,” analyst Jasper Lawler at CMC Markets UK said.
“Since the decision was made, emerging markets closed the day higher while stocks in the US and Europe have dropped,” he added.
London’s FTSE 100 index dropped 1.34 per cent to 6,104.11 points.
Frankfurt’s DAX 30 plunged 3.06 per cent to 9,916.16 and the CAC 40 in Paris sank 2.56 per cent to 4,535.85.
The Fed’s “hesitation reflects uncertainty, which is never good for stocks,” said Alexandre Baradez, an analyst at IG France.
HONG KONG – The US central bank’s decision to hold off on a rate rise sent emerging market currencies and most Asian markets advancing, as concerns eased over an outflow of cash as the global economy suffers a painful slowdown.
“For emerging-market central bankers, the Fed has given them some much-needed breathing room,” said Jonathan Lewis, a principal at New York-based Samson Capital Advisors LLC.
“Postponing a Fed tightening gives these central bankers room to be more accommodative, without their actions being offset by a tighter Fed,” he added, according to Bloomberg News.
Shanghai ended 0.38 per cent higher, while Seoul put on almost one per cent and Sydney ticked up 0.46 per cent.
Hong Kong ended 0.30 per cent higher.
However, Tokyo finished almost two per cent lower with investors spooked by Yellen’s downbeat assessment of the global outlook while exporters were also hurt by the stronger yen.
WELLINGTON – The S&P/NZX 50 Index gained 17.81 points, or 0.3 per cent, to 5712.04.
