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You can find the current article at its original source at https://www.theguardian.com/business/2018/feb/05/stock-markets-continue-to-fall-amid-interest-rate-hike-fears
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| Version 3 | Version 4 |
|---|---|
| Stock markets continue to fall amid interest rate hike fears | Stock markets continue to fall amid interest rate hike fears |
| (about 1 hour later) | |
| US Federal Reserve expected to increase rates at faster pace than planned | US Federal Reserve expected to increase rates at faster pace than planned |
| Phillip Inman | Phillip Inman |
| Mon 5 Feb 2018 15.27 GMT | Mon 5 Feb 2018 15.27 GMT |
| Last modified on Mon 5 Feb 2018 20.41 GMT | |
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| Shares in Britain’s top 100 publicly listed companies on Monday suffered their worst single-day slump since Theresa May called the snap election last April, amid fears that the US Federal Reserve is poised to raise interest rates at a faster pace than expected. | Shares in Britain’s top 100 publicly listed companies on Monday suffered their worst single-day slump since Theresa May called the snap election last April, amid fears that the US Federal Reserve is poised to raise interest rates at a faster pace than expected. |
| Wall Street joined a rout of global stock markets, tumbling by more than 450 points by about 6.30pm (GMT) as investors contemplated the end of an era of cheap lending by central banks to boost growth. The slide in share values of America’s largest industrial businesses followed the dumping of shares on stock markets across Asia and Europe earlier in the day. | Wall Street joined a rout of global stock markets, tumbling by more than 450 points by about 6.30pm (GMT) as investors contemplated the end of an era of cheap lending by central banks to boost growth. The slide in share values of America’s largest industrial businesses followed the dumping of shares on stock markets across Asia and Europe earlier in the day. |
| In London, the index of Britain’s top 100 companies stretched its longest losing streak since last November into a fifth day, following a 1.3% fall. The FTSE 100 index tumbled to 7,345, having peaked at almost 7,800 last month. | In London, the index of Britain’s top 100 companies stretched its longest losing streak since last November into a fifth day, following a 1.3% fall. The FTSE 100 index tumbled to 7,345, having peaked at almost 7,800 last month. |
| The Dow Jones index of industrial companies in New York lost 666 points on Friday, a 2.5% drop that was its worst one-day performance since June 2016. It had another torrid day on Monday, off 1.8% by the middle of the trading session. Analysts said the sell-off followed concerns that the US central bank would move more quickly to head off the threat from rising inflation by raising interest rates more than three times this year, from 1.5% to nearer 3%. | The Dow Jones index of industrial companies in New York lost 666 points on Friday, a 2.5% drop that was its worst one-day performance since June 2016. It had another torrid day on Monday, off 1.8% by the middle of the trading session. Analysts said the sell-off followed concerns that the US central bank would move more quickly to head off the threat from rising inflation by raising interest rates more than three times this year, from 1.5% to nearer 3%. |
| Hussein Sayed, the chief market strategist at currency dealer FXTM, said investors were nervous about the prospect of higher interest rates. “The era of cheap money is ending, and for markets who got addicted to it, it’s undoubtedly bad news,” he said. | Hussein Sayed, the chief market strategist at currency dealer FXTM, said investors were nervous about the prospect of higher interest rates. “The era of cheap money is ending, and for markets who got addicted to it, it’s undoubtedly bad news,” he said. |
| The Fed is expected to react to survey data published last week showing that average US wage growth hit 2.9% in January and could go above 3% in the next few months. Wage increases are one of the main components pushing up prices in US shops. | The Fed is expected to react to survey data published last week showing that average US wage growth hit 2.9% in January and could go above 3% in the next few months. Wage increases are one of the main components pushing up prices in US shops. |
| Last week, a member of the Fed’s main interest-rate setting committee, Robert Kaplan, suggested that rates could increase by more than 0.75 percentage points this year if the economy maintains its fast rate of growth and wages continue to rise strongly. He said: “You will see some inflation pressure this year. I believe that the Fed should be removing accommodation gradually but deliberately.” | Last week, a member of the Fed’s main interest-rate setting committee, Robert Kaplan, suggested that rates could increase by more than 0.75 percentage points this year if the economy maintains its fast rate of growth and wages continue to rise strongly. He said: “You will see some inflation pressure this year. I believe that the Fed should be removing accommodation gradually but deliberately.” |
| Mark Haefele, the global chief investment officer of wealth management at UBS, said the bond market, which trades in government and corporate debt, remained steady despite recent declines in values that increased the likelihood of defaults. He said stock market investors should sit tight while bond yields, which measure the risk attached to each bond, remained modest. | Mark Haefele, the global chief investment officer of wealth management at UBS, said the bond market, which trades in government and corporate debt, remained steady despite recent declines in values that increased the likelihood of defaults. He said stock market investors should sit tight while bond yields, which measure the risk attached to each bond, remained modest. |
| “We don’t believe that now is a time to reduce exposure to stocks. As long as the recent rise in bond yields moderates, we are confident that market conditions will remain orderly.” | “We don’t believe that now is a time to reduce exposure to stocks. As long as the recent rise in bond yields moderates, we are confident that market conditions will remain orderly.” |
| Mihir Kapadia, the chief executive of Sun Global Investments, said stocks were still well ahead of their value at the start of the year. “The start of the week has been a mirror-image reversal to the optimism expressed in the start of the year and indeed in the last 13 months, when many major markets had risen over 25%-40%,” he said. “After such a great performance some meaningful pullback is to be expected.” | Mihir Kapadia, the chief executive of Sun Global Investments, said stocks were still well ahead of their value at the start of the year. “The start of the week has been a mirror-image reversal to the optimism expressed in the start of the year and indeed in the last 13 months, when many major markets had risen over 25%-40%,” he said. “After such a great performance some meaningful pullback is to be expected.” |
| Far eastern markets fell overnight by the most in over a year, with the Nikkei among the worst affected following a 2.5% drop to 22,682. The price of a barrel of Brent crude oil slid to $67.30 from above $70 in the middle of last month. The FTSE’s fall was limited by worse than expected economic data that sent the pound down to $1.40 from $1.42 overnight. | Far eastern markets fell overnight by the most in over a year, with the Nikkei among the worst affected following a 2.5% drop to 22,682. The price of a barrel of Brent crude oil slid to $67.30 from above $70 in the middle of last month. The FTSE’s fall was limited by worse than expected economic data that sent the pound down to $1.40 from $1.42 overnight. |
| Car registrations in the UK slumped by 6% in January and the Markit/CIPS survey of the services sector recorded its worst level of growth for 16 months. | Car registrations in the UK slumped by 6% in January and the Markit/CIPS survey of the services sector recorded its worst level of growth for 16 months. |
| Many of the UK’s biggest businesses earn the majority of their income in dollars and any increase in the dollar’s value versus the pound increases their profits. | Many of the UK’s biggest businesses earn the majority of their income in dollars and any increase in the dollar’s value versus the pound increases their profits. |
| Stock markets | Stock markets |
| Global economy | Global economy |
| Interest rates | Interest rates |
| FTSE | FTSE |
| Dow Jones | Dow Jones |
| Federal Reserve | Federal Reserve |
| news | news |
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