Sunday, 09 December, 2018

Global stocks tumble after Trump's 'crazy' Federal Reserve comment

US stocks have plunged to their worst loss in eight months RICHARD DREW APUS stocks have plunged to their worst loss in eight months
Ginger Lawrence | 11 October, 2018, 15:51

President Trump said that the Federal Reserve has "gone crazy" on short-term interest rates, marking his latest swipe at policy makers in reaction to the stock market's tumble on Wednesday.

Ahead of a campaign rally for the USA mid-term elections next month, Trump told reporters: "I think the Fed is making a mistake". "They're so tight. I think the Fed has gone insane", Trump told reporters on the tarmac in Pennsylvania.

"Actually, it's a correction that we've been waiting for, for a long time", Trump said about the market selloff.

"I think the Fed is making a mistake".

Tech and luxury stocks have been among those to feel the worst pain in the sell-off.

In Europe this week, the closely-watched spread between the rates on 10-year bonds in Italy compared with those offered by Germany, which is a measure of the added risk perceived by investors to holding onto Italian debt, hit the highest level since April 2013.

"I don't think it's that at all", he said.

The Dow Jones dropped by more than 800 points on Wednesday in one of the worst days for the stock market since February, and President Donald Trump had an explanation ready when asked by reporters.

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He said he didn't think the current rate of U.S inflation merits higher borrowing costs.

Concerns about US Federal Reserve interest rates are also worrying investors.

The markets have been on a historic climb - with the Dow and S&P each notching dozens of new highs since 2016 - buoyed by a strong USA economy and solid corporate earnings. The S&P 500 lost 94 points, or 3.3 percent, to 2,785.

Trump has previously voiced his displeasure with the Fed's rate hikes, saying he would rather shift his focus to the continued growth of the USA economy and creating more jobs.

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

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

Currency investors took shelter in the safe-haven yen, resulting in steep losses for Japanese exporters, with electronics giant Sony down almost five percent as blue-chip firms flashed red across the trading board. "The Fed increasing rates to me was a sign that the economy was able to stand on its own two feet". Berkshire Hathaway dipped 4.7 percent to $213.10 and reinsurer Everest Re slid 5.1 percent to $217.73. Tiffany plunged 10.2 percent to $110.38 and Ralph Lauren fell 8.4 percent to $116.96.