Saturday, 20 October, 2018

Trump says market drop is 'correction that we've been waiting for'

A screen above the floor of the New York Stock Exchange shows the closing number of the Dow Jones industrial average Wednesday Oct. 10 2018. The Dow Jones Industrial Average plunged more than 800 points its worst drop in eight months led by sharp dec US markets drop sharply as investors are spooked by rising rates
Nellie Chapman | 12 October, 2018, 04:38

The global losses rippled across Asia on Thursday after Trump criticised US Federal Reserve rate increases as "crazy", - though he also added that the market's plunge was "a correction that we've been waiting for for a long time".

USA stocks dropped for a second day on Thursday, underscoring investors' concerns over rising interest rates and a trade war, despite inflation data that was weaker than expected.

"The Fed continues to flood the market with United States dollars", he said in one tweet.

The tech-rich Nasdaq Composite Index plummeted 4.1 percent to finish the session at 7,422.05, its worst fall in percentage terms since the surprise Brexit vote in June 2016.

After President Donald Trump warned that the Federal Reserve is "going loco" and "making a big mistake", his chief economic adviser Larry Kudlow stepped in front of reporters at the White House and insisted the President wasn't "calling out the Fed".

"I think the Fed is making a mistake", Trump told reporters as he arrived for a campaign rally ahead of the USA mid-term elections.

"I think we don't have to go as fast", the president answered to a question about the Fed raising rates by CNBC from the south lawn of the White House.

Trump has repeatedly touted Wall Street records as proof of the success of his economic program.

The Fed last raised rates in September and left intact its plans to steadily tighten monetary policy, as it forecast that the USA economy would enjoy at least three more years of economic growth.

The rout in USA shares followed substantial losses on European bourses, due in part to tensions between Brussels and Rome over Italian budget plans that have revived fears about the eurozone. The Dow lost more than 550 points in afternoon trading.

The sell-off came a day after the International Monetary Fund said the world economy is plateauing and cut its growth forecast for the first time in more than two years, blaming escalating trade tensions and stresses in emerging markets. Yet, Lesetja Kganyago, governor of the South African Reserve Bank who was alongside Carney on the panel, said regulators need to be "given the space to act independently without political interference" in order to advance many agendas.

The central bank's preferred measure of inflation is roughly at policy makers' 2 percent objective, and Powell said last week that "the outlook of forecasters inside and outside the Fed is for more of the same".

Federal Reserve has raised interest rates three times this year.

Japan's Nikkei and the Hang Seng in Hong Kong were down by up to 4%.

Chinese internet group Tencent fell for the tenth consecutive day, dropping more than 7% through morning trade. Amazon dropped another 3.4% on Thursday and Apple fell another 1.4%.

The yield on 10-year U.S. Treasury bonds reached a seven-year high this week of 3.25 percent (it receded some Wednesday as stocks dropped), up from 2.82 percent in August. The market's recent decline was set off by a sharp drop in bond prices and a corresponding increase in yields last week and early this week.