Global stocks sink after Fed’s hike signal

SEOUL, Korea, Republic Of – Global stocks slumped Thursday after the U.S. Federal Reserve raised its key interest rate and said it would pick up the pace of future increases.

KEEPING SCORE: In early trading, Britain’s FTSE 100 retreated 0.7 per cent to 7,653.22 and France’s CAC 40 fell 0.4 per cent to 5,429.86. Germany’s DAX was down 0.3 per cent to 12,847.45. Futures indicated a lacklustre start on Wall Street. Futures for the Standard & Poor’s 500 index and Dow were flat.

ASIA’S DAY: Japan’s Nikkei 225 sank 1 per cent to 22,738.61 while South Korea’s Kospi plunged 1.8 per cent 2,423.48. Hong Kong’s Hang Seng index dropped 0.9 per cent to 30,440.17 and the Shanghai Composite Index was down 0.2 per cent to 3,044.16. Australia’s S&P-ASX 200 slipped 0.1 per cent to 6,016.60. Stocks in Taiwan and Southeast Asia were lower.

FED: The Fed’s rate hike was its second this year. The American central bank raised its outlook for increases this year from three to four. Chairman Jerome Powell said the U.S. economy is in great shape but investors worry faster rate hikes could stifle growth.

ANALYST’S TAKE: Expectations for further Fed tightening and U.S.-Chinese trade tensions “provide Asian markets with poor intraday leads,” said Jingyi Pan of IG in a report.

KOREA TALKS: South Korean investors sold stocks after President Donald Trump’s meeting with North Korean leader Kim Jong Un on Tuesday. Trump boasted the meeting ended any nuclear threat from North Korea, and South Korean President Moon Jae-in tried to put a positive spin on the outcome, but it produced no details on how or when North Korea’s nuclear weapons might be eliminated or even reduced. South Korean businesses that have recently gained on expectations for joint inter-Korean business projects were among the biggest losers.

CURRENCIES: The dollar slipped to 109.95 yen from 110.33 yen. The euro rose to $1.1825 from $1.1793.

ENERGY: Benchmark U.S. crude added 9 cents to $66.73 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 0.4 per cent to $66.64 a barrel in New York on Wednesday. Brent crude, used to price international oils, gained 1 cent to $76.75 per barrel in London. It gained 1.1 per cent to $76.74 per barrel on Wednesday.