AP – World shares skidded yesterday after United States (US) stocks tumbled as the Federal Reserve (Fed) hinted it may deliver fewer rate cuts in 2025 than earlier thought.
The Fed cut its key rate by a quarter of a percentage point to between 4.25 per cent and 4.5 per cent, as expected.
The dollar was trading at JPY157.04, up 1.5 per cent from JPY154.79 late Wednesday. World markets fell, but generally by less than two per cent.
In early European trading, Britain’s FTSE 100 lost 1.2 per cent to 8,102.36 and the CAC 40 in Paris fell 1.2 per cent to 7,299.99. Germany’s DAX was one per cent lower, at 20,045.12.
The future for the S&P 500 gained 0.4 per cent while that for the Dow Jones Industrial Average was 0.3 per cent higher. In Asia, Tokyo’s Nikkei 225 lost 0.7 per cent to 38,813.58.
The Hang Seng index fell 0.6 per cent to 19,752.51, while the Shanghai Composite index dropped 0.4 per cent to 3,370.03.
Australia’s S&P/ASX 200 shed 1.7 per cent to 8,168.20, while the Kospi in South Korea slipped two per cent to 2,435.93. India’s Sensex fell 1.2 per cent, while Bangkok’s SET fell 1.5 per cent.
On Wednesday, the S&P 500 fell three per cent, just shy of its biggest loss for the year. The Dow lost 1,123 points, or 2.6 per cent, and the Nasdaq composite dropped 3.6 per cent.
The Russell 2000 index of small-cap stocks tumbled 4.4 per cent.
Wednesday’s rate cut was the third this year after the Fed began in September to lower rates from a two-decade high to support the job market. Wall Street loves easier interest rates, but the cut was already widely expected and investors were more focused on how much more the Fed will cut next year.
A lot is riding on it, particularly after expectations for a series of cuts in 2025 helped the US stock market set an all-time high 57 times so far in 2024.
