- European stocks lower on global growth outlook
- Banks drag on FTSE 100
- Gold miners benefit as Gold soars
- US stocks to open lower
- S&P 500: 3 points lower at 1,987
- Dow Jones: 21 points lower at 16,653
- Nasdaq 100: 10 points lower at 4,374
The Fed’s decision not to hike interest rates, even by a notch, despite a domestic economy close to full employment could be seen as a concession to emerging markets. It’s not that the Fed is looking to ‘save’ the emerging world; it was an admission that the US can’t stand alone and is reliant on the health of the global economy.
Leaving US interest rates at rock bottom could mark a turning point for the relative performance of emerging and developed markets. Since the decision was made, EM’s closed the day higher while stocks in the US and Europe have dropped.
Having rallied leading into the FOMC meeting in expectation of the beginning of a rising rate environment, which is supportive of margins on lending, banks were top fallers across Europe. In the UK, Barclays (LONDON:BARC) was down as much as 2% while Lloyds (LONDON:LLOY) and HSBC were both lower by over 1%.
The Federal Reserve’s fear over a global growth slowdown cast a shadow across the whole of the FTSE 100. The UK’s benchmark index has large number of multinationals exposed to the global economy.
The basic resource sector was down after the Fed highlighted the market volatility and growth slowdown in emerging markets, the region that consumes most of the world’s commodities. The only significant beneficiaries were gold miners Randgold (LONDON:RRS) and Fresnillo (LONDON:FRES) which rose nearly 4% after a drop in the US Dollar spurred a jump in the price of gold.
After a volatile session post-Fed announcement yesterday; US stocks look set for a lower open. US Stocks initially rose after announcement the Fed would stay on hold but sold off because of uncertainty over the future rate path and the weak global growth outlook.
The median rates forecast of committee members for 2016/17 is now 25bp lower than before which would imply a slower pace of rate rises on top of a delayed start. This leaves the Fed more dovish than expected which should be a good thing for stocks in the near term. The trouble is investors have to contend with another few months of "will they or won’t they."
USA pre-opening levels
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