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Stock markets rattled after dovish Fed leaves rates unchanged - live updates Stock markets rattled after dovish Fed leaves rates unchanged
(about 3 hours later)
9.14pm BST21:14
US stock markets close 2% down
Rupert Neate
US stock markets closed down almost 2% on Friday following sharp falls across the world due to investor’s renewed concern about the health of the global economy after the US Federal Reserve’s decided to leave American interest rates on hold.
The Dow Jones Industrial Average closed down 291.7 points ( or 1.75%) to 16,383 points. The S&P 500 lost 32.09 points (or 1.6%) to 1,958.11 and the Nasdaq fell 66.72 points (1.36%) to 4,827.23 points.
The Fed is fanning fears over global growth, causing a big selloff: http://t.co/N57fUQRJf4 pic.twitter.com/7cjswWI260
You can also read our updated news story here:
Related: Global shares fall sharply as US rate decision unnerves markets
Updated at 9.15pm BST
8.30pm BST20:30
Helena Smith
Over in Athens tonight, Syriza has held a pre-election rally where Padomes leader Pablo Iglesias has just addressed the crowd with the opening line: “I will speak in Spanish because in Berlin they have to learn what Spanish and Greek sounds like!”
He then went on to liken Tsipras to “a lion ... Noone has ever tried to defend your rights like Alexis.”
5.48pm BST17:485.48pm BST17:48
European shares close sharply lower after Fed commentsEuropean shares close sharply lower after Fed comments
Nick FletcherNick Fletcher
The US Federal Reserve may have left interest rates unchanged but the central bank’s cautious comments about the outlook for the global economy sent shudders through global markets.The US Federal Reserve may have left interest rates unchanged but the central bank’s cautious comments about the outlook for the global economy sent shudders through global markets.
Chris Beauchamp, senior market analyst at IG said: “Markets can be a fickle thing. Going into last night’s Fed meeting, talk revolved around how damaging a rate hike would be to equity markets. It turns out that no hike can also be rather problematic, especially when accompanied by a sober statement and downgrades to economic forecasts. As a result, stocks moved swiftly into the red this morning and have stayed there all day.”Chris Beauchamp, senior market analyst at IG said: “Markets can be a fickle thing. Going into last night’s Fed meeting, talk revolved around how damaging a rate hike would be to equity markets. It turns out that no hike can also be rather problematic, especially when accompanied by a sober statement and downgrades to economic forecasts. As a result, stocks moved swiftly into the red this morning and have stayed there all day.”
European markets were harder hit than the UK, with the weaker dollar pushing the euro higher and causing concern for European exporters. So the closing scores showed:European markets were harder hit than the UK, with the weaker dollar pushing the euro higher and causing concern for European exporters. So the closing scores showed:
On Wall Street the Dow Jones Industrial Average is currently down 235 points or 1.42%.On Wall Street the Dow Jones Industrial Average is currently down 235 points or 1.42%.
On that note we’ll close for the moment, but should be back to catch the Wall Street close. Meanwhile, thanks for all your comments.On that note we’ll close for the moment, but should be back to catch the Wall Street close. Meanwhile, thanks for all your comments.
4.41pm BST16:414.41pm BST16:41
Christopher Vecchio, Currency Analyst at DailyFX, confirms that a US rate hike this side of Christmas is now less likely than before:Christopher Vecchio, Currency Analyst at DailyFX, confirms that a US rate hike this side of Christmas is now less likely than before:
The implied probability of a rate hike in October, per the Fed funds futures contract, dropped from near 45% yesterday to 18% today; for December, from above 60% yesterday to 26% today.The implied probability of a rate hike in October, per the Fed funds futures contract, dropped from near 45% yesterday to 18% today; for December, from above 60% yesterday to 26% today.
4.08pm BST16:084.08pm BST16:08
Updated at 4.09pm BSTUpdated at 4.09pm BST
3.28pm BST15:283.28pm BST15:28
Some analysts are arguing today that the Fed has created a new ‘third mandate’, on top of its existing dual duties to deliver price stability and maximum employment.Some analysts are arguing today that the Fed has created a new ‘third mandate’, on top of its existing dual duties to deliver price stability and maximum employment.
Jeremy Zirin, chief equity strategist at UBS Wealth Management, says (via Reuters)Jeremy Zirin, chief equity strategist at UBS Wealth Management, says (via Reuters)
“Investors are wrestling with how concerned they should be regarding global growth.”“Investors are wrestling with how concerned they should be regarding global growth.”
“The Fed has introduced a quasi third mandate about the global growth, apart from the labor market and inflation.”“The Fed has introduced a quasi third mandate about the global growth, apart from the labor market and inflation.”
That means added uncertainty, which usually equals falling stock markets....That means added uncertainty, which usually equals falling stock markets....
Updated at 3.47pm BSTUpdated at 3.47pm BST
3.22pm BST15:223.22pm BST15:22
Every major stock market is in the red, with the exception of the Australian and Hong Kong indices which closed many hours ago before the rout got underway.Every major stock market is in the red, with the exception of the Australian and Hong Kong indices which closed many hours ago before the rout got underway.
Updated at 3.30pm BSTUpdated at 3.30pm BST
3.20pm BST15:203.20pm BST15:20
Perhaps we can file today in the ‘inexplicable market reaction’ box.Perhaps we can file today in the ‘inexplicable market reaction’ box.
Stocks are acting like they expected more QE yesterday,Stocks are acting like they expected more QE yesterday,
Updated at 3.20pm BSTUpdated at 3.20pm BST
2.44pm BST14:442.44pm BST14:44
Bill Gross backs the FedBill Gross backs the Fed
Bond trading veteran Bill Gross says the Fed made the right call last night, given financial market conditions.Bond trading veteran Bill Gross says the Fed made the right call last night, given financial market conditions.
Speaking on Bloomberg TV right now, Gross suggests that the current era of non-standard monetary policy could last for another five or ten years.Speaking on Bloomberg TV right now, Gross suggests that the current era of non-standard monetary policy could last for another five or ten years.
That would allow the problems created during the ‘fat’ decades of debt-driven growth pre-Lehman Brothers to be worked off, he argues.That would allow the problems created during the ‘fat’ decades of debt-driven growth pre-Lehman Brothers to be worked off, he argues.
Bill Gross says we need low interest rates in order to recapitalize. Watch live http://t.co/H89WEacu1C pic.twitter.com/um4ZAczB26Bill Gross says we need low interest rates in order to recapitalize. Watch live http://t.co/H89WEacu1C pic.twitter.com/um4ZAczB26
Gross concedes through that asset prices are simply too high, partly because they’re being priced against record low US interest rates and German bond yields.Gross concedes through that asset prices are simply too high, partly because they’re being priced against record low US interest rates and German bond yields.
Ultimately, there has to be a rebalance if capitalism itself is to rebalance, Gross added.Ultimately, there has to be a rebalance if capitalism itself is to rebalance, Gross added.
2.35pm BST14:352.35pm BST14:35
Wall Street opens sharply lowerWall Street opens sharply lower
Nick FletcherNick Fletcher
US markets have followed the rest of the world lower after the Federal Reserve’s concerns about economic growth.US markets have followed the rest of the world lower after the Federal Reserve’s concerns about economic growth.
The Dow Jones Industrial Average has lost more than 200 points or 1.2% in early trading, while the FTSE 100 is now 1.6% lower and Germany’s Dax has dropped 3.49%, with investors worried about euro strength against a weaker dollar hitting European exporters.The Dow Jones Industrial Average has lost more than 200 points or 1.2% in early trading, while the FTSE 100 is now 1.6% lower and Germany’s Dax has dropped 3.49%, with investors worried about euro strength against a weaker dollar hitting European exporters.
Dow opens down more than 200 points http://t.co/Mnt63OLRu6 pic.twitter.com/Ds2IKg7tMGDow opens down more than 200 points http://t.co/Mnt63OLRu6 pic.twitter.com/Ds2IKg7tMG
Updated at 2.36pm BSTUpdated at 2.36pm BST
2.31pm BST14:312.31pm BST14:31
2.30pm BST14:302.30pm BST14:30
The Wall Street opening bell has been rung, and the New York stock market is open for business.The Wall Street opening bell has been rung, and the New York stock market is open for business.
2.23pm BST14:232.23pm BST14:23
The scale of today’s selloff is a little surprising, given that the markets didn’t really expect the Federal Reserve to raise interest rates rates yesterday.The scale of today’s selloff is a little surprising, given that the markets didn’t really expect the Federal Reserve to raise interest rates rates yesterday.
But they also didn’t expect the Fed to be quite so gloomy about the global economy. That dovishness is making investors around the globe reassess the prospects of a rate hike.But they also didn’t expect the Fed to be quite so gloomy about the global economy. That dovishness is making investors around the globe reassess the prospects of a rate hike.
Guy Dunham of Baring Asset Management in London explains:Guy Dunham of Baring Asset Management in London explains:
Federal Reserve slightly surprised market participants by combining a decision to leave interest rates where they are with dovish language, and revised down their median short and long-term expectations by 0.25%.Federal Reserve slightly surprised market participants by combining a decision to leave interest rates where they are with dovish language, and revised down their median short and long-term expectations by 0.25%.
Investors who hold risky assets are particularly uneasy, he adds, given the confusion over the timing of any rate hike.Investors who hold risky assets are particularly uneasy, he adds, given the confusion over the timing of any rate hike.
Here’s a reminder of how rate expectations have been pushed back:Here’s a reminder of how rate expectations have been pushed back:
Implied probabilities of a Fed rate hike following yesterday’s meeting pic.twitter.com/dNsqvdk1dNImplied probabilities of a Fed rate hike following yesterday’s meeting pic.twitter.com/dNsqvdk1dN
1.55pm BST13:551.55pm BST13:55
The Fed decision sparked a small rally in some emerging markets, but nothing sensational.The Fed decision sparked a small rally in some emerging markets, but nothing sensational.
India’s Sensex index jumped 2% earlier today, on relief that US rates hadn’t been hiked. The optimism has faded, though, with the index up just 1% in late trading.India’s Sensex index jumped 2% earlier today, on relief that US rates hadn’t been hiked. The optimism has faded, though, with the index up just 1% in late trading.
Viktor Shvets, head of Asian strategy at Macquarie Securities, predicts that the optimism won’t last. He told CNBC:Viktor Shvets, head of Asian strategy at Macquarie Securities, predicts that the optimism won’t last. He told CNBC:
“I think in the short-term, emerging markets will be supported because the Federal Reserve didn’t tighten. Basically, there’s little bit less pressure for U.S. dollar to appreciate, a little bit more liquidity.“I think in the short-term, emerging markets will be supported because the Federal Reserve didn’t tighten. Basically, there’s little bit less pressure for U.S. dollar to appreciate, a little bit more liquidity.
“There’ll be some relief particularly, in places like Indonesia, Malaysia, up to places like Brazil, South Africa, Russia. Will it last? The answer is no.”“There’ll be some relief particularly, in places like Indonesia, Malaysia, up to places like Brazil, South Africa, Russia. Will it last? The answer is no.”
Warning: This market bounce will be short-lived » http://t.co/1Y5CeNECdD pic.twitter.com/qexyUc7dzwWarning: This market bounce will be short-lived » http://t.co/1Y5CeNECdD pic.twitter.com/qexyUc7dzw
Updated at 1.56pm BSTUpdated at 1.56pm BST
1.46pm BST13:461.46pm BST13:46
Traders heading to Wall Street this morning should take their best tin hat.Traders heading to Wall Street this morning should take their best tin hat.
Futures: Dow -200; S&P -24; Nasdaq - 51Futures: Dow -200; S&P -24; Nasdaq - 51
Updated at 1.46pm BSTUpdated at 1.46pm BST
1.45pm BST13:451.45pm BST13:45
Now this is curious. Someone in the City has sold shares in two blue chip heavyweights, BP and HSBC, way below the market value.Now this is curious. Someone in the City has sold shares in two blue chip heavyweights, BP and HSBC, way below the market value.
Shares in both companies briefly dropped by almost 5%, before swiftly rebounding.Shares in both companies briefly dropped by almost 5%, before swiftly rebounding.
C'mon, who did it?! #HSBC pic.twitter.com/Y2yeQTv3cUC'mon, who did it?! #HSBC pic.twitter.com/Y2yeQTv3cU
Someone had a pop at BP stock as well pic.twitter.com/zXXflkce2LSomeone had a pop at BP stock as well pic.twitter.com/zXXflkce2L
It’s probably a ‘fat-fingered trade’, where someone presses the wrong button. But two at the same time suggests something went badly awry.It’s probably a ‘fat-fingered trade’, where someone presses the wrong button. But two at the same time suggests something went badly awry.
@FerroTV It's no fat finger. Someone SAT on a keyboard.@FerroTV It's no fat finger. Someone SAT on a keyboard.
1.40pm BST13:401.40pm BST13:40
Andy Haldane’s fascinating speech (online here) also outlines how Britain could introduce a tax on money.Andy Haldane’s fascinating speech (online here) also outlines how Britain could introduce a tax on money.
That would encourage people to spend, pushing up inflation, and avoiding the problem that it’s hard to cut UK interest rates much lower.That would encourage people to spend, pushing up inflation, and avoiding the problem that it’s hard to cut UK interest rates much lower.
Another option is to embrace an electronic currency like Bitcoin, which Haldane says has “real potential”.Another option is to embrace an electronic currency like Bitcoin, which Haldane says has “real potential”.
If paper currency were then abolished altogether, it would be possible to impose negative interest rates on deposits.If paper currency were then abolished altogether, it would be possible to impose negative interest rates on deposits.
As Haldane puts it:As Haldane puts it:
What I think is now reasonably clear is that the distributed payment technology embodied in Bitcoin has real potential. On the face of it, it solves a deep problem in monetary economics: how to establish trust – the essence of money – in a distributed network. Bitcoin’s “blockchain” technology appears to offer an imaginative solution to that distributed trust problem.What I think is now reasonably clear is that the distributed payment technology embodied in Bitcoin has real potential. On the face of it, it solves a deep problem in monetary economics: how to establish trust – the essence of money – in a distributed network. Bitcoin’s “blockchain” technology appears to offer an imaginative solution to that distributed trust problem.
Whether a variant of this technology could support central bank-issued digital currency is very much an open question. So too is whether the public would accept it as a substitute for paper currency. Central bank-issued digital currency raises big logistical and behavioural questions too. How practically would it work? What security and privacy risks would it raise? And how would public and privately-issued monies interact?Whether a variant of this technology could support central bank-issued digital currency is very much an open question. So too is whether the public would accept it as a substitute for paper currency. Central bank-issued digital currency raises big logistical and behavioural questions too. How practically would it work? What security and privacy risks would it raise? And how would public and privately-issued monies interact?
1.19pm BST13:191.19pm BST13:19
The Bank of England’s chief economist is trending on Twitter after warning that the UK recovery is weakening, and may need a rate cut not a hike.The Bank of England’s chief economist is trending on Twitter after warning that the UK recovery is weakening, and may need a rate cut not a hike.
The editor of the FT is leading the charge:The editor of the FT is leading the charge:
Must read: Andy Haldane on the future of money #BigBrain http://t.co/l69PKc7lVlMust read: Andy Haldane on the future of money #BigBrain http://t.co/l69PKc7lVl
#Interestrates could actually be cut next, not raised, says @bankofengland economist Andy Haldane. Some fear #ChinaMeltdown & 0% #inflation#Interestrates could actually be cut next, not raised, says @bankofengland economist Andy Haldane. Some fear #ChinaMeltdown & 0% #inflation
Migration season for central bank doves? PostFed, BoE's Haldane says may need to cut rates, not raise them http://t.co/n0sBOM1gH6 @ReutersUKMigration season for central bank doves? PostFed, BoE's Haldane says may need to cut rates, not raise them http://t.co/n0sBOM1gH6 @ReutersUK
Updated at 1.20pm BSTUpdated at 1.20pm BST
12.51pm BST12:5112.51pm BST12:51
European markets hit new lowsEuropean markets hit new lows
The European selloff is gathering pace, led by Germany’s DAX index.The European selloff is gathering pace, led by Germany’s DAX index.
The strengthening euro, and new confusion over when the Fed might hike rates, are proving to be a nasty cocktail for traders across Europe.The strengthening euro, and new confusion over when the Fed might hike rates, are proving to be a nasty cocktail for traders across Europe.
Conner Campbell of SpreadEx explains:Conner Campbell of SpreadEx explains:
The longer investors had to ruminate on Thursday’s Fed statement the worse they seemed to take it, with the European indices widening their losses as the day went on.The longer investors had to ruminate on Thursday’s Fed statement the worse they seemed to take it, with the European indices widening their losses as the day went on.
An export-hurting rise in the euro-dollar was the main culprit, with the currency pairing jumping by around 0.4% as the morning continued.An export-hurting rise in the euro-dollar was the main culprit, with the currency pairing jumping by around 0.4% as the morning continued.
And with US stocks heading for a bath too, all the main European indices have shed at least 1%. The DAX is down 2.9%, back below the 10,000 point mark at 9,933.And with US stocks heading for a bath too, all the main European indices have shed at least 1%. The DAX is down 2.9%, back below the 10,000 point mark at 9,933.
And here’s a reminder of how the euro jumped last night, when the Fed decision came.And here’s a reminder of how the euro jumped last night, when the Fed decision came.
Updated at 1.24pm BSTUpdated at 1.24pm BST
12.13pm BST12:1312.13pm BST12:13
The futures market is now suggesting chunky falls on Wall Street when trading begins, in two hours time.The futures market is now suggesting chunky falls on Wall Street when trading begins, in two hours time.
Out of hours Dow now pointing to a -170 start, back into Tuesday's range.Out of hours Dow now pointing to a -170 start, back into Tuesday's range.
Updated at 12.13pm BSTUpdated at 12.13pm BST
12.12pm BST12:1212.12pm BST12:12
Andy Haldane: UK isn't ready for higher interest ratesAndy Haldane: UK isn't ready for higher interest rates
Katie AllenKatie Allen
The Bank of England’s chief economist is reiterating his opposition to an interest rate hike in the near future and says policy could just as easily be loosened as tightened if the UK is hurt by turmoil in emerging markets.The Bank of England’s chief economist is reiterating his opposition to an interest rate hike in the near future and says policy could just as easily be loosened as tightened if the UK is hurt by turmoil in emerging markets.
Andy Haldane is using a speech to business owners in Northern Ireland to discuss events in the Greek economy and in China, where an economic slowdown has coincided with a stock market rout and sent jitters through global markets.Andy Haldane is using a speech to business owners in Northern Ireland to discuss events in the Greek economy and in China, where an economic slowdown has coincided with a stock market rout and sent jitters through global markets.
Haldane, one of nine policymakers that vote on interest rates at the Bank, reiterated warnings he made earlier this year that the UK economy was not ready for higher borrowing costs.Haldane, one of nine policymakers that vote on interest rates at the Bank, reiterated warnings he made earlier this year that the UK economy was not ready for higher borrowing costs.
Haldane’s comments put him at odds with other members of the monetary policy committee, who have been talking up the strength of the UK economy and its ability to withstand contagion from slowing emerging markets.Haldane’s comments put him at odds with other members of the monetary policy committee, who have been talking up the strength of the UK economy and its ability to withstand contagion from slowing emerging markets.
“In my view, the balance of risks to UK growth, and to UK inflation at the two-year horizon, is skewed squarely and significantly to the downside,” Haldane said in the speech to the Portadown Chamber of Commerce.“In my view, the balance of risks to UK growth, and to UK inflation at the two-year horizon, is skewed squarely and significantly to the downside,” Haldane said in the speech to the Portadown Chamber of Commerce.
“Against that backdrop, the case for raising UK interest rates in the current environment is, for me, some way from being made.”“Against that backdrop, the case for raising UK interest rates in the current environment is, for me, some way from being made.”
Haldane said it was unclear how much the UK would be affected by the slowdown in emerging nations, significant drivers of global growth in recent years. But he said there were significant risks of contagion given the growing clout of developing economies in recent years.Haldane said it was unclear how much the UK would be affected by the slowdown in emerging nations, significant drivers of global growth in recent years. But he said there were significant risks of contagion given the growing clout of developing economies in recent years.
Added to that, Haldane highlighted challenges in the UK.Added to that, Haldane highlighted challenges in the UK.
“While the UK’s recovery remains on track, there are straws in the wind to suggest slowing growth into the second half of the year. Employment is softening, with a fall in employment in the second quarter and surveys suggesting slowing growth rates. Surveys of output growth, in manufacturing, construction and possibly services, have also recently weakened. All of these data were taken prior to recent emerging market economy wobbles,” he said.“While the UK’s recovery remains on track, there are straws in the wind to suggest slowing growth into the second half of the year. Employment is softening, with a fall in employment in the second quarter and surveys suggesting slowing growth rates. Surveys of output growth, in manufacturing, construction and possibly services, have also recently weakened. All of these data were taken prior to recent emerging market economy wobbles,” he said.
Given those risks, there was no case right now for hiking, he said, concluding:Given those risks, there was no case right now for hiking, he said, concluding:
“One reason not to do so is that, were the downside risks I have discussed to materialise, there could be a need to loosen rather than tighten the monetary reins as a next step to support UK growth and return inflation to target.”“One reason not to do so is that, were the downside risks I have discussed to materialise, there could be a need to loosen rather than tighten the monetary reins as a next step to support UK growth and return inflation to target.”
How low can you go? - speech by Andrew Haldane http://t.co/w3rPTP8fJqHow low can you go? - speech by Andrew Haldane http://t.co/w3rPTP8fJq
11.32am BST11:3211.32am BST11:32
Anne Richards: Fed was right to hold fireAnne Richards: Fed was right to hold fire
Janet Yellen doesn’t want to go down in history as the Fed chair who plunged the global economy into recession, and the US with it.Janet Yellen doesn’t want to go down in history as the Fed chair who plunged the global economy into recession, and the US with it.
So explains Anne Richards, chief investment officer at Aberdeen Asset Management. She believes the Federal Reserve’s rate-setting committee was right to leave interest rates unchangedSo explains Anne Richards, chief investment officer at Aberdeen Asset Management. She believes the Federal Reserve’s rate-setting committee was right to leave interest rates unchanged
Richards told Bloomberg TV that raw economic data simply doesn’t provide a compelling reason to hike rates. If the Fed moves too quickly, it “could make 2016 much uglier from an economic perspective”.Richards told Bloomberg TV that raw economic data simply doesn’t provide a compelling reason to hike rates. If the Fed moves too quickly, it “could make 2016 much uglier from an economic perspective”.
Richards added that the Fed has now looked “beyond its borders” to survey the global economy, and concluded that the outlook for next year isn’t as rosy as they thought.Richards added that the Fed has now looked “beyond its borders” to survey the global economy, and concluded that the outlook for next year isn’t as rosy as they thought.
11.19am BST11:1911.19am BST11:19
Wall Street is expected to follow Europe’s lead lower, when the New York stock exchange opens in just over three hours.Wall Street is expected to follow Europe’s lead lower, when the New York stock exchange opens in just over three hours.
US indices slipping lower in the overnight markets. Dow currently 80 points lower than yesterday's close.US indices slipping lower in the overnight markets. Dow currently 80 points lower than yesterday's close.
Updated at 11.19am BSTUpdated at 11.19am BST
10.58am BST10:5810.58am BST10:58
Fed hike in 2015 now less likelyFed hike in 2015 now less likely
After Janet Yellen’s dovish performance last night, investors have all-but discounted the chances that interest rates will be hiked at October’s meeting.After Janet Yellen’s dovish performance last night, investors have all-but discounted the chances that interest rates will be hiked at October’s meeting.
And there’s much less confidence that the Fed will raise rates before the end of the year. There’s now more chance that the first hike comes in 2016.And there’s much less confidence that the Fed will raise rates before the end of the year. There’s now more chance that the first hike comes in 2016.
The Bond Vigilantes team at M&G have kindly tweeted the key charts:The Bond Vigilantes team at M&G have kindly tweeted the key charts:
The markets now think an Oct rate hike is off the cards, despite Yellen saying the meeting is “live” pic.twitter.com/al1QmDgSvFThe markets now think an Oct rate hike is off the cards, despite Yellen saying the meeting is “live” pic.twitter.com/al1QmDgSvF
Implied probabilities of a Fed rate hike following yesterday’s meeting pic.twitter.com/dNsqvdk1dNImplied probabilities of a Fed rate hike following yesterday’s meeting pic.twitter.com/dNsqvdk1dN
10.46am BST10:4610.46am BST10:46
Fed gives German stocks the shiversFed gives German stocks the shivers
Yikes. The German DAX is now down almost 2%.Yikes. The German DAX is now down almost 2%.
The selloff is driven by fears that Germany’s exporters will be thumped by the renewed strength of the euro against the US dollar.The selloff is driven by fears that Germany’s exporters will be thumped by the renewed strength of the euro against the US dollar.
Top fallers include carmakers BMW and Daimler, chemical giant BASF, and industrial conglomerate ThyssenKrupp.Top fallers include carmakers BMW and Daimler, chemical giant BASF, and industrial conglomerate ThyssenKrupp.
10.12am BST10:1210.12am BST10:12
Traders need to fasten their seat belts for a period of high volatility, warns Ipek Ozkardeskaya of London Capital Group.Traders need to fasten their seat belts for a period of high volatility, warns Ipek Ozkardeskaya of London Capital Group.
She explains that economic data will be scrutinised more tightly than ever, thanks to the Fed’s new concern about the global economy.She explains that economic data will be scrutinised more tightly than ever, thanks to the Fed’s new concern about the global economy.
The inflation in China and the unemployment in the Eurozone will be as important as onion prices in India and dairy product sales volume in New Zealand. Given the dull economic fundamentals across the globe, it may be hard for the Fed to take the first step before the end of the year.The inflation in China and the unemployment in the Eurozone will be as important as onion prices in India and dairy product sales volume in New Zealand. Given the dull economic fundamentals across the globe, it may be hard for the Fed to take the first step before the end of the year.
It will be even harder for the market to assess a consensus and to come up with expectations.It will be even harder for the market to assess a consensus and to come up with expectations.
#Fed inaction adds nothing but turbulence to the market: $TRY $BIST #EM http://t.co/rQnoPTxO8f#Fed inaction adds nothing but turbulence to the market: $TRY $BIST #EM http://t.co/rQnoPTxO8f
9.57am BST09:579.57am BST09:57
Gold miners are benefitting from the Fed’s reluctance to raise interest rates, reports my colleague Nick Fletcher:Gold miners are benefitting from the Fed’s reluctance to raise interest rates, reports my colleague Nick Fletcher:
Janet Yellen’s concerns about the Chinese economy has undermined leading shares, despite the Federal Reserve chair announcing on Thursday that US interest rates would remain on hold.Janet Yellen’s concerns about the Chinese economy has undermined leading shares, despite the Federal Reserve chair announcing on Thursday that US interest rates would remain on hold.
The worries about the outlook for the global economy have pushed mining shares lower, although precious metal miners are shining on hopes that the Fed decision will weaken the dollar - which is already happening - and lift gold prices.The worries about the outlook for the global economy have pushed mining shares lower, although precious metal miners are shining on hopes that the Fed decision will weaken the dollar - which is already happening - and lift gold prices.
So Randgold Resources has risen 118p to £38.47 and Fresnillo is 17p better at 607p.So Randgold Resources has risen 118p to £38.47 and Fresnillo is 17p better at 607p.
Related: FTSE falters after Fed but gold shines as dollar fallsRelated: FTSE falters after Fed but gold shines as dollar falls
9.51am BST09:519.51am BST09:51
HSBC’s chief economist reminds us that we’ve been expecting a US rate rise “soon” for a long time.HSBC’s chief economist reminds us that we’ve been expecting a US rate rise “soon” for a long time.
Remember the beginning of the year when everyone said US rates would definitely rise in June? And then September? Still waiting....Remember the beginning of the year when everyone said US rates would definitely rise in June? And then September? Still waiting....
9.46am BST09:469.46am BST09:46
The German stock market is continuing to weaken, now down around 1.3% today.The German stock market is continuing to weaken, now down around 1.3% today.
DAX looking ugly. A break below 10068 could have major bearish implications pic.twitter.com/ZQog7mg0WyDAX looking ugly. A break below 10068 could have major bearish implications pic.twitter.com/ZQog7mg0Wy
Updated at 9.46am BSTUpdated at 9.46am BST
9.28am BST09:289.28am BST09:28
Britain’s interest rates could now remain lower for longer, thanks to the Fed, argues RBS’s economics team.Britain’s interest rates could now remain lower for longer, thanks to the Fed, argues RBS’s economics team.
They point out that the two policy rates usually rack each other quite closely, due to a) the amount of trade between the two countries, and b) the US’s pre-eminent position.They point out that the two policy rates usually rack each other quite closely, due to a) the amount of trade between the two countries, and b) the US’s pre-eminent position.
The Bank of England is also likely to favour waiting for the Fed to hike first.The Bank of England is also likely to favour waiting for the Fed to hike first.
Why yesterday's #Fed decision not to raise rates matters for the UK. Read: http://t.co/E3IIQqLkPr pic.twitter.com/qN0fs5gkbzWhy yesterday's #Fed decision not to raise rates matters for the UK. Read: http://t.co/E3IIQqLkPr pic.twitter.com/qN0fs5gkbz
RBS also pulled together four charts to explain why the Fed didn’t hike (from this Powerpoint presentation):RBS also pulled together four charts to explain why the Fed didn’t hike (from this Powerpoint presentation):
9.21am BST09:219.21am BST09:21
When China sneezes, the US catches a cold and Europe gets the flu. #Fed #PBoCWhen China sneezes, the US catches a cold and Europe gets the flu. #Fed #PBoC
9.10am BST09:109.10am BST09:10
The Federal Reserve has knocked confidence in the global economy by leaving interest rates unchanged and sounding so cautious, argues Jameel Ahmad, FXTM chief market analyst.The Federal Reserve has knocked confidence in the global economy by leaving interest rates unchanged and sounding so cautious, argues Jameel Ahmad, FXTM chief market analyst.
The indication from the Federal Reserve that global economic weakness played a major factor in delaying a US interest rate rise strongly weakens the possibility of an interest rate rise at all this year.The indication from the Federal Reserve that global economic weakness played a major factor in delaying a US interest rate rise strongly weakens the possibility of an interest rate rise at all this year.
Global growth concerns are a reoccurring theme as current suggestions strongly point towards economic momentum in China continuing to slow even further next year. Both the Bank of Japan (BoJ) and European Central Bank (ECB) are going to find themselves under increasing pressure to reinvigorate economic momentum, and the emerging markets remain vulnerable to further weakness.Global growth concerns are a reoccurring theme as current suggestions strongly point towards economic momentum in China continuing to slow even further next year. Both the Bank of Japan (BoJ) and European Central Bank (ECB) are going to find themselves under increasing pressure to reinvigorate economic momentum, and the emerging markets remain vulnerable to further weakness.
8.57am BST08:578.57am BST08:57
Marc Ostwald of ADM Investor Services is fuming about the Federal Reserve’s decision to leave rates unchanged, and sound rather dovish about inflation and China.Marc Ostwald of ADM Investor Services is fuming about the Federal Reserve’s decision to leave rates unchanged, and sound rather dovish about inflation and China.
He points out that the Fed raised its growth forecasts, and lowered its unemployment projection, clearing the way for a rate hike. Instead, weaker global conditions were cited as a reason to ignore these forecasts.He points out that the Fed raised its growth forecasts, and lowered its unemployment projection, clearing the way for a rate hike. Instead, weaker global conditions were cited as a reason to ignore these forecasts.
Ostwald says:Ostwald says:
If the FOMC’s objective was to convey confusion, it has succeeded, thereby ploughing a deep furrow of instability and destabilization, and shining a very bright light on the large debt and liquidity trap it and other G7 central banks have spent 7 years crafting.If the FOMC’s objective was to convey confusion, it has succeeded, thereby ploughing a deep furrow of instability and destabilization, and shining a very bright light on the large debt and liquidity trap it and other G7 central banks have spent 7 years crafting.
Fed no longer a cen bank, just source of confusion, ploughing deep furrow of instability & destabilization, and nightmare of liquidity trapFed no longer a cen bank, just source of confusion, ploughing deep furrow of instability & destabilization, and nightmare of liquidity trap
8.50am BST08:508.50am BST08:50
Eurozone stock markets are suffering because the euro has rallied against the dollar overnight.Eurozone stock markets are suffering because the euro has rallied against the dollar overnight.
That’s bad for exporters in France and Germany.That’s bad for exporters in France and Germany.
It may also have spoiled Mario Draghi’s breakfast. The ECB president managed to weaken the euro earlier this month by hinting at further stimulus measures. Maybe he’ll have to deliver soon.It may also have spoiled Mario Draghi’s breakfast. The ECB president managed to weaken the euro earlier this month by hinting at further stimulus measures. Maybe he’ll have to deliver soon.
Question now, how long can the ECB afford to wait?Question now, how long can the ECB afford to wait?
8.33am BST08:338.33am BST08:33
The dollar has just hit a three-week low against major currencies, down 0.2%.The dollar has just hit a three-week low against major currencies, down 0.2%.
That reflects the chance that US interest rates may not rise until next year.That reflects the chance that US interest rates may not rise until next year.
8.25am BST08:258.25am BST08:25
European markets hit by Fed fearsEuropean markets hit by Fed fears
Germany and France’s main stock indices have both fallen over 1% in early trading, echoing the selloff in London.Germany and France’s main stock indices have both fallen over 1% in early trading, echoing the selloff in London.
Investors in Frankfurt and Paris aren’t impressed by Janet Yellen’s dovish performance last night, where the Fed chief warned that the slowing Chinese economy could “restrain US economic activity somewhat”.Investors in Frankfurt and Paris aren’t impressed by Janet Yellen’s dovish performance last night, where the Fed chief warned that the slowing Chinese economy could “restrain US economic activity somewhat”.
That’s encouraging investors to sell shares, and pile into safe assets including German bunds (see 7.55am)That’s encouraging investors to sell shares, and pile into safe assets including German bunds (see 7.55am)
Here’s the damage across Europe’s stock markets this morning:Here’s the damage across Europe’s stock markets this morning:
Updated at 8.25am BSTUpdated at 8.25am BST
8.14am BST08:148.14am BST08:14
You might think that ultra-low interest rates would boost stock markets in Europe.You might think that ultra-low interest rates would boost stock markets in Europe.
But traders are worried that Janet Yellen sounded quite concerned about low inflation and the global economy at last night’s press conference.But traders are worried that Janet Yellen sounded quite concerned about low inflation and the global economy at last night’s press conference.
Mike van Dulken of Accendo Markets explains:Mike van Dulken of Accendo Markets explains:
Markets had anticipated either a dovish hike (easy does it) or a hawkish hold (be prepared) [but got neither].Markets had anticipated either a dovish hike (easy does it) or a hawkish hold (be prepared) [but got neither].
While markets had desired clarity, it appears that uncertainty (and volatility) may be here to stay (December hike, Jan, later?).While markets had desired clarity, it appears that uncertainty (and volatility) may be here to stay (December hike, Jan, later?).
Updated at 8.14am BSTUpdated at 8.14am BST
8.08am BST08:088.08am BST08:08
And we’re off! Europe’s stock markets are open, allowing traders to give their verdict on last night’s Federal Reserve decision.And we’re off! Europe’s stock markets are open, allowing traders to give their verdict on last night’s Federal Reserve decision.
As predicted, shares are dropping in London, with the FTSE 100 losing 33 points or 0.5% to 6153.As predicted, shares are dropping in London, with the FTSE 100 losing 33 points or 0.5% to 6153.
Other European indices are also dipping, as the relief rally that began in Asia peters out....Other European indices are also dipping, as the relief rally that began in Asia peters out....
Updated at 8.09am BSTUpdated at 8.09am BST
7.59am BST07:597.59am BST07:59
Wendell Perkins, senior portfolio manager for Manulife Asset Management, reckons US interest rates will probably remain at their record lows until next year.Wendell Perkins, senior portfolio manager for Manulife Asset Management, reckons US interest rates will probably remain at their record lows until next year.
Perkins also predicts more volatility as the markets react to last night’s Fed decision.Perkins also predicts more volatility as the markets react to last night’s Fed decision.
Investors need to consider a) When are they going to raise, b) what are they afraid of, and c) how worried are they about conditions in the global economy, he told Bloomberg TV.Investors need to consider a) When are they going to raise, b) what are they afraid of, and c) how worried are they about conditions in the global economy, he told Bloomberg TV.
7.55am BST07:557.55am BST07:55
Money is pouring into German government bonds this morning.Money is pouring into German government bonds this morning.
This is pushing down the yield (or interest rate) on debt issued by Europe’s largest member. That’s often a sign of anxiety in the markets.This is pushing down the yield (or interest rate) on debt issued by Europe’s largest member. That’s often a sign of anxiety in the markets.
Big moves in European #bond yields following US...German debt rallying, yield dropping 9bps on 10yer pic.twitter.com/St3WcgBPjJBig moves in European #bond yields following US...German debt rallying, yield dropping 9bps on 10yer pic.twitter.com/St3WcgBPjJ
7.46am BST07:467.46am BST07:46
Good morning all. There’s a subdued feel in the City today, after the Fed disappointed those hoping that the Federal Reserve would raise interest rates last night.Good morning all. There’s a subdued feel in the City today, after the Fed disappointed those hoping that the Federal Reserve would raise interest rates last night.
The decision wasn’t a shock (as we blogged yesterday, the markets suggested only a 32% chance of a hike).The decision wasn’t a shock (as we blogged yesterday, the markets suggested only a 32% chance of a hike).
But some investors are now fretting about why Janet Yellen and the rest of the FOMC held borrowing costs at record lows again.But some investors are now fretting about why Janet Yellen and the rest of the FOMC held borrowing costs at record lows again.
It’s slightly ironic. Traders don’t want the flow of cheap money to end, but they’re also worried that central bankers feel the need to keep replenishing the punchbowl.It’s slightly ironic. Traders don’t want the flow of cheap money to end, but they’re also worried that central bankers feel the need to keep replenishing the punchbowl.
As London CapitalGroup dealer Jonathan Sudaria puts it:As London CapitalGroup dealer Jonathan Sudaria puts it:
“Yes, we’ve got a reprieve on an immediate interest rate hike, but thereason for the stay of execution is rather bearish itself.”“Yes, we’ve got a reprieve on an immediate interest rate hike, but thereason for the stay of execution is rather bearish itself.”
And that’s why the main European stock markets are expected to dip in early trading.And that’s why the main European stock markets are expected to dip in early trading.
Seems Europe gonna follow US equities lower...US on hold highlight risks to global economy&just postpones inevitable? pic.twitter.com/2grwHY02m2Seems Europe gonna follow US equities lower...US on hold highlight risks to global economy&just postpones inevitable? pic.twitter.com/2grwHY02m2
Updated at 7.48am BSTUpdated at 7.48am BST
7.27am BST07:277.27am BST07:27
I’m handing over now to my colleague Graeme Wearden who is poised at his work station in London. Thanks for joining me.I’m handing over now to my colleague Graeme Wearden who is poised at his work station in London. Thanks for joining me.
7.13am BST07:137.13am BST07:13
7.07am BST07:077.07am BST07:07
Back in Asia, the Nikkei is still in the doldrums while the other major bourses perform pretty well on the prospect of cheaper money.Back in Asia, the Nikkei is still in the doldrums while the other major bourses perform pretty well on the prospect of cheaper money.
But in Japan a delay in the US hike has served to strengthen the yen, which is bad for exports and for stock markets.But in Japan a delay in the US hike has served to strengthen the yen, which is bad for exports and for stock markets.
Only a weakening yen will bring relief to the Nikkei according to Capital Economics’ Julian Jessop, who said in a note:Only a weakening yen will bring relief to the Nikkei according to Capital Economics’ Julian Jessop, who said in a note:
The single most important driver of equity performance in the next year or so is likely to be renewed weakness in the yen.The single most important driver of equity performance in the next year or so is likely to be renewed weakness in the yen.
He sees the prospect of more QE from the Bank of Japan and a rate hike by the Fed as the two main factors to that situation around.He sees the prospect of more QE from the Bank of Japan and a rate hike by the Fed as the two main factors to that situation around.
Updated at 7.07am BSTUpdated at 7.07am BST
6.41am BST06:416.41am BST06:41
IG seeing European markets opening down, but only slightly.IG seeing European markets opening down, but only slightly.
6.26am BST06:266.26am BST06:26
China selloff was a 'necessary correction' – French finance ministerChina selloff was a 'necessary correction' – French finance minister
The French finance minister, Michel Sapin, is in Beijing and he’s being polite about the state of the Chinese economy.The French finance minister, Michel Sapin, is in Beijing and he’s being polite about the state of the Chinese economy.
It’s a real concern for a lot of people, including America’s finest economic brains. But Sapin said he sees no particularly significant risk from recent stock market turbulence and the recent fall was a “necessary correction”, Reuters reports.It’s a real concern for a lot of people, including America’s finest economic brains. But Sapin said he sees no particularly significant risk from recent stock market turbulence and the recent fall was a “necessary correction”, Reuters reports.
Updated at 6.26am BSTUpdated at 6.26am BST
6.21am BST06:216.21am BST06:21
Opinion still mixed on whether the Fed move was the correct one.Opinion still mixed on whether the Fed move was the correct one.
6.12am BST06:126.12am BST06:12
Chris Weston from IG in Melbourne has delivered his verdict on the day’s events and his view is that the Fed was as dovish as it could possibly have been and would have gone for a rise if it had not been for the August turmoil in China.Chris Weston from IG in Melbourne has delivered his verdict on the day’s events and his view is that the Fed was as dovish as it could possibly have been and would have gone for a rise if it had not been for the August turmoil in China.
It seems logical the central bank would have raised rates if it weren’t for recent international developments, but they tried desperately to buy themselves flexibility.It seems logical the central bank would have raised rates if it weren’t for recent international developments, but they tried desperately to buy themselves flexibility.
And as he says in conclusion, it could get interesting in Europe today despite the fairly muted response in Asia:And as he says in conclusion, it could get interesting in Europe today despite the fairly muted response in Asia:
It promises to be a very interesting session in Europe and the US, as traders have time to really assess the Fed’s view and what it means for markets. As always, the first move might not be the right move and cooler heads should prevail.It promises to be a very interesting session in Europe and the US, as traders have time to really assess the Fed’s view and what it means for markets. As always, the first move might not be the right move and cooler heads should prevail.
Updated at 6.13am BSTUpdated at 6.13am BST
6.03am BST06:036.03am BST06:03
SummarySummary
Time for a quick recap on the day’s main news here in Asia Pacific:Time for a quick recap on the day’s main news here in Asia Pacific:
5.48am BST05:485.48am BST05:48
As dawn breaks over Europe this is a good time to see what’s happening with the futures markets.As dawn breaks over Europe this is a good time to see what’s happening with the futures markets.
And it looks like the main markets will be up with FTSE predicted to open up 0.32%, the DAX in Germany up 0.26% and the CAC in paris up 0.32%.And it looks like the main markets will be up with FTSE predicted to open up 0.32%, the DAX in Germany up 0.26% and the CAC in paris up 0.32%.
5.26am BST05:265.26am BST05:26
Looks like the jury is still well and truly out on whether China’s economy is going to have a hard or soft landing as it decends from the heights of double digit growth. One of the reasons the Fed gave for keeping on hold were “heightened concerns” about the global economy in the wake the sharp selloff on Chinese stock markets in August and whether that means China can keep driving global growth as it has helped to do since the GFC.Looks like the jury is still well and truly out on whether China’s economy is going to have a hard or soft landing as it decends from the heights of double digit growth. One of the reasons the Fed gave for keeping on hold were “heightened concerns” about the global economy in the wake the sharp selloff on Chinese stock markets in August and whether that means China can keep driving global growth as it has helped to do since the GFC.
Developments we saw in financial markets in August partly reflected concerns of downside risk to Chinese economic performance and the deftness with which policymakers are addressing those concerns.Developments we saw in financial markets in August partly reflected concerns of downside risk to Chinese economic performance and the deftness with which policymakers are addressing those concerns.
If you want to see her full press conference, here it is:If you want to see her full press conference, here it is:
5.14am BST05:145.14am BST05:14
Chinese house prices riseChinese house prices rise
Today’s most interesting data comes from China where home prices inched upwards for a fourth consecutive month in August.Today’s most interesting data comes from China where home prices inched upwards for a fourth consecutive month in August.
Average new home prices inched up 0.3% in August from the previous month, according to Reuters calculations based on data released by the national statistics bureau on Friday, the same pace as in July.Average new home prices inched up 0.3% in August from the previous month, according to Reuters calculations based on data released by the national statistics bureau on Friday, the same pace as in July.
But Reuters reported that the Chinese property market – source of many concerns about the health of the economy – would not be booming again any time soon.But Reuters reported that the Chinese property market – source of many concerns about the health of the economy – would not be booming again any time soon.
Analysts do not expect a full-blown turnaround any time soon, as a huge overhang of unsold homes discourages new construction and investment in all but the biggest cities.Analysts do not expect a full-blown turnaround any time soon, as a huge overhang of unsold homes discourages new construction and investment in all but the biggest cities.
5.04am BST05:045.04am BST05:04
Back to the markets then and the Japanese stock market has started up again after the lunch break. The Nikkei is still down though at 18,170, a fall of -1.4%.Back to the markets then and the Japanese stock market has started up again after the lunch break. The Nikkei is still down though at 18,170, a fall of -1.4%.
Elsewhere it seems reasonably calm. In fact you could say the S&P/ASX200 here in Australia is having a good day. It is standing at 5,189 points, a rise of 0.8% on the day.Elsewhere it seems reasonably calm. In fact you could say the S&P/ASX200 here in Australia is having a good day. It is standing at 5,189 points, a rise of 0.8% on the day.
The Shanghai Composite in China is up 0.4% at lunch.The Shanghai Composite in China is up 0.4% at lunch.
4.50am BST04:504.50am BST04:50
Stevens’ testimony before the House of Representatives economics committee was wide-ranging. he also spoke about how he thinks the Australian economy will weather the headwinds facing China which Janet Yellen is so concerned about.Stevens’ testimony before the House of Representatives economics committee was wide-ranging. he also spoke about how he thinks the Australian economy will weather the headwinds facing China which Janet Yellen is so concerned about.
Whether that financial volatility itself will serve further to dampen global growth prospects remains to be seen. Sometimes such events portend a wider set of economic events, but just as often, they don’t.There is still a pretty good chance that we will come out of this episode fairly well, and much better than we came out of previous episodes of this type.Whether that financial volatility itself will serve further to dampen global growth prospects remains to be seen. Sometimes such events portend a wider set of economic events, but just as often, they don’t.There is still a pretty good chance that we will come out of this episode fairly well, and much better than we came out of previous episodes of this type.
4.40am BST04:404.40am BST04:40
US Fed will raise rates before Christmas – RBA chiefUS Fed will raise rates before Christmas – RBA chief
Glenn Stevens, the governor of the Reserve Bank, has weighed into the debate today. Despite suggestions that the Fed might now not raise until 2016, he thinks it will raise rates before Christmas. That means either at its October meeting or in December.Glenn Stevens, the governor of the Reserve Bank, has weighed into the debate today. Despite suggestions that the Fed might now not raise until 2016, he thinks it will raise rates before Christmas. That means either at its October meeting or in December.
Speaking at a parliamentary hearing in Canberra, he said:Speaking at a parliamentary hearing in Canberra, he said:
I would still think an increase in the Fed funds rate is probably going to happen this year. The majority of FOMC [Federal Open Market Committee] members still think that they’re likely to start raising this year, there’s two meetings left.I would still think an increase in the Fed funds rate is probably going to happen this year. The majority of FOMC [Federal Open Market Committee] members still think that they’re likely to start raising this year, there’s two meetings left.
4.35am BST04:354.35am BST04:35
Australia can weather global turmoil – RBAAustralia can weather global turmoil – RBA
Glenn Stevens, the governor of the Reserve Bank of Australia, has been giving evidence today to a parliamentary committee. He has an optimistic view of the economy and thinks it can weather the headwinds threatening China and which are worrying Janet Yellen so much.Glenn Stevens, the governor of the Reserve Bank of Australia, has been giving evidence today to a parliamentary committee. He has an optimistic view of the economy and thinks it can weather the headwinds threatening China and which are worrying Janet Yellen so much.
Stevens told the House of Representatives economics committee in Canberra:Stevens told the House of Representatives economics committee in Canberra:
There is still a pretty good chance that we will come out of this episode fairly well, and much better than we came out of previous episodes of this type.There is still a pretty good chance that we will come out of this episode fairly well, and much better than we came out of previous episodes of this type.
In the period ahead if we can get the non-resources part of the economy to keep improving gradually, build some confidence ... then we’ll get the unemployment rate to come down.We ought be looking to get back into the fives over time, and given enough time I think we will, unless we’re hit by a bad shock somewhere [NB it’s currently 6.2%].In the period ahead if we can get the non-resources part of the economy to keep improving gradually, build some confidence ... then we’ll get the unemployment rate to come down.We ought be looking to get back into the fives over time, and given enough time I think we will, unless we’re hit by a bad shock somewhere [NB it’s currently 6.2%].
4.24am BST04:244.24am BST04:24
Nine years is a long time in global economics. Check out that gold price.Nine years is a long time in global economics. Check out that gold price.
4.21am BST04:214.21am BST04:21
As mentioned below, the Australian dollar has benefited from the expectation that US borrowing costs would stay on hold and rein in the long march of the greenback. As a result it has rallied around 2c in the past week or so since sinking to a new six-year low and this afternoon is buying US71.95c.As mentioned below, the Australian dollar has benefited from the expectation that US borrowing costs would stay on hold and rein in the long march of the greenback. As a result it has rallied around 2c in the past week or so since sinking to a new six-year low and this afternoon is buying US71.95c.
Early on Friday it spiked to US72.76c, its highest level since August 24.Early on Friday it spiked to US72.76c, its highest level since August 24.
Updated at 4.22am BSTUpdated at 4.22am BST
4.11am BST04:114.11am BST04:11
Here’s some more reaction.Here’s some more reaction.
4.03am BST04:034.03am BST04:03
It is not in doubt that the Fed intends to raise rates, but the question that has obsessed economists and investors for the past couple of years has always been the timing.It is not in doubt that the Fed intends to raise rates, but the question that has obsessed economists and investors for the past couple of years has always been the timing.
For Larry Elliott, the Guardian’s economics editor, Thursday night’s decision shows that the Fed has become ultra-cautious and does not want to risk hiking rates if it has to reduce them again because the recovery is not strong enough. You can read his full article here but this is the main thrust:For Larry Elliott, the Guardian’s economics editor, Thursday night’s decision shows that the Fed has become ultra-cautious and does not want to risk hiking rates if it has to reduce them again because the recovery is not strong enough. You can read his full article here but this is the main thrust:
This is the weakest recovery the world’s biggest economy has experienced in modern times and even now, more than six years after the trough of the recession, there are mixed signals. The Fed is not entirely convinced that it is party time for the US economy.The Fed is also weighing up the implications of a US interest rate increase on emerging markets, and in particular whether the prospect of higher US yields will intensify capital flows out of countries such as China and Brazil.So when will rates rise? When there is a further improvement in the jobs market and when the Fed is “reasonably confident” that inflation is on course to move back up to 2%. Not yet, in other words.This is the weakest recovery the world’s biggest economy has experienced in modern times and even now, more than six years after the trough of the recession, there are mixed signals. The Fed is not entirely convinced that it is party time for the US economy.The Fed is also weighing up the implications of a US interest rate increase on emerging markets, and in particular whether the prospect of higher US yields will intensify capital flows out of countries such as China and Brazil.So when will rates rise? When there is a further improvement in the jobs market and when the Fed is “reasonably confident” that inflation is on course to move back up to 2%. Not yet, in other words.
3.58am BST03:583.58am BST03:58
Markets-wise it has been a bit mixed. The expectation was for a hold so the semi-rally in stocks and currencies suchas the Australian dollar in recent days showed that the decision has been priced in.Markets-wise it has been a bit mixed. The expectation was for a hold so the semi-rally in stocks and currencies suchas the Australian dollar in recent days showed that the decision has been priced in.
However, there has still been a bit of action, notably in Japan where the Nikkei plunged on the opening before fighting back.However, there has still been a bit of action, notably in Japan where the Nikkei plunged on the opening before fighting back.
Here are the scores so far:Here are the scores so far:
3.35am BST03:353.35am BST03:35
Good afternoon/morning and welcome to the markets live blog following the Fed’s decision to keep rates near zero.Good afternoon/morning and welcome to the markets live blog following the Fed’s decision to keep rates near zero.
You can read how the action unfolded here as relayed by my colleagues Graeme Wearden and Jane Kasperkevic. But the main takeaway seems to be that the very dovish comments from Fed chair Janet Yellen suggests that she and her fellow committee members might wait until next year to increase borrowing costs.You can read how the action unfolded here as relayed by my colleagues Graeme Wearden and Jane Kasperkevic. But the main takeaway seems to be that the very dovish comments from Fed chair Janet Yellen suggests that she and her fellow committee members might wait until next year to increase borrowing costs.
here’s the verdict of the world’s biggest bond trading company, Pimco.here’s the verdict of the world’s biggest bond trading company, Pimco.