Global stocks tumble after Trump 'crazy' Fed comment

AFP
Japanese stocks plunged by more than 3 percent Thursday following the worst session on Wall Street for months.
AFP
AFP

Traders work on the floor of the New York Stock Exchange on October 10, 2018, in New York City. Stocks fell sharply on Wednesday following a decline in tech shares and concerns over rising rates. The Dow Jone Industrial average closed down over 800 points. 


Japanese stocks plunged by more than 3 percent Thursday following the worst session on Wall Street for months, as US President Donald Trump said the Federal Reserve had "gone crazy" with plans for higher interest rates.

The benchmark Nikkei 225 dropped nearly 2 percent at the open and extended losses to below the 3-percent mark, as traders fretted about surging interest rates and an ongoing trade spat.

Currency investors took shelter in the safe-haven yen, resulting in steep losses for Japanese exporters, with electronics giant Sony down nearly 5 percent as blue-chip firms flashed red across the trading board.

"The markets are fraught with peril," warned Stephen Innes, head of trading at OANDA.

The steep drop in Japan followed a decline on Wall Street of nearly 830 points, the biggest fall since February, amid Trump's latest criticism of the Federal Reserve, the US central bank.

"I think the Fed is making a mistake. It's so tight. I think the Fed has gone crazy," Trump told reporters as he arrived for a campaign rally ahead of the US mid-term elections.

He has frequently criticized the US central bank for gradually raising interest rates, and on Wednesday reiterated his position: "I really disagree with what the Fed is doing."

Trump has repeatedly touted Wall Street records as proof of the success of his economic programme, including his confrontational trade strategy.

But he downplayed the first major drop in months, saying, "it's a correction that we've been waiting for a long time."

'Exposure'

The rout in US shares followed substantial losses on European bourses, due in part to tensions between Brussels and Rome over Italian budget plans that have revived fears about the eurozone.

Bourses in Paris and Frankfurt both lost more than 2 percent, while London fell 1.3 percent.

"The selling is not panicking but it's persistent," Briefing.com analyst Patrick O'Hare said of the proceedings. "It's all about investors rethinking their exposure to stocks."

Many of the biggest US names fell hard in Wednesday's session, with Apple, Boeing and Facebook all slumping more than 4 percent and Amazon, Nike and Microsoft shedding more than 5 percent.

Stocks have been under pressure since the yield on 10-year US Treasury bonds jumped above 3 percent last week, a sudden move that raised fears of an overheating economy, speeding inflation and more aggressive Federal Reserve interest rate increases.

Last week's jump in yields followed strong US data but many analysts have been anticipating dynamics in the bond market to change due to expectations that central banks in Europe and Japan will soon phase out bond-buying programs.

"It's shifting the tectonic plates," said Jack Ablin, chief investment officer at Cresset Wealth Advisors.

The turmoil on stock markets came a day after the International Monetary Fund slashed its global growth forecast on worries about trade wars and weakness in emerging markets.

In other markets, oil prices fell sharply on worries that Hurricane Michael will dent demand for gasoline and other petroleum products.

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