June 26, 2017

Global shares fall on Fed rate hike, plunge in oil prices

19 June 2017, 02:45 | Cesar Cruz

Stocks sink as investors seek safety after weak sales data

Stocks slide as investors seek safety after weak sales data

Not all observers agree though and plenty are sticking with the view that a further Fed rate hike is inevitable later this year.

Anna Stupnytska, global economist at Fidelity International, said she expected this to be the last hike for 2017, given emerging headwinds for the United States economy, in particular for consumption, as well as the worryingly weak inflation and wage growth paths. The Washington Post reported that special counsel Robert Mueller is investigating Trump for possible obstruction of justice, a criminal charge. The central bank bulked up its holdings to about $4.2 trillion in assets, including a lot of Treasury bonds and mortgage-backed securities, beginning during the dimmest days after the Panic of 2008 to stave off an even deeper depression.

"What I can tell you is that we anticipate reducing reserve balances and our overall balance sheet to levels appreciably below those seen in recent years but larger than before the financial crisis", Fed Chairwoman Janet Yellen said in a press conference following the release of the Fed's policy statement.

"The meeting was definitely tilted towards the hawkish side".

Traders work at their desks in front of the German share price index, DAX board, at the stock exchange in Frankfurt, Germany, July 1, 2016. The FTSE 100 of Britain dropped 1.1 percent to 7,393. After a late tumble in technology stocks, the Nasdaq composite lost 0.4 percent, to 6,194.89.

KEEPING SCORE: Germany's DAX fell 0.6 percent to 12,727.14 while the CAC40 of France sank 0.8 percent to 5,202.60.

Worry that policy tightening measures will weigh on China's growth, kept Chinese stocks in check.

This week, as expected, the US Central Bank raised interest rates to 1.25 per cent and talked about normalising its policy.

Portugal and Mexico draw 2-2 in Confederations Cup
Mexico midfielder Carlos Vela got to the ball near the far post and sent it to the middle of the area for Chicharito's goal. Ochoa made a great diving save in the 85th to keep young Portugal forward Andre Silva from scoring with a header.

The bond market is decidedly unhappy with the Fed's thinking: Long-term interest rates continued their seven-month-long decline from a high of 2.6 percent in December to just 2.15 percent now.

CURRENCIES: The dollar edged lower to 109.56 from 109.57 yen.

Inflation tends to erode bonds' value over time, with a signal of easing inflation sparking some buying in government paper, driving yields down.

German 10-year yields, the benchmark for borrowing costs in the bloc, rose one basis point to 0.24%.

Euro zone finance ministers will meet later in the day to discuss whether or not to approve the disbursement of aid to Greece, money that the country needs to avoid defaulting on upcoming debt obligations.

Oil prices, which are having a negative impact on inflation worldwide, held steady with global inventories high and doubts over whether the OPEC producers group would be able to implement agreed output cuts. Brent crude, used to price worldwide oils, fell 16 cents to $46.84 a barrel.

Gold, sought as a safe investment in uncertain times, rose 0.1% to $1,262/oz.

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