American markets dropped yesterday after the FOMC announced that it would continue tapering the stimulus by another $10 billion. Though investors had been anticipating this, the sentiment was still bearish – especially as the Fed announced planes to increase the Federal Funds rate faster than expected. Thus, it is not surprising that the Dow closed down 0.70%, the S&P 500 went down 0.61%, and the Nasdaq went down 0.59%. Today, investors will be watching Existing Home Sales data coming out at 14:00 GMT for information on the strength of the US economy.
Asian markets have also dropped due to the tapering decision. However, the big source of decline in Asia was due to Yellen’s announcement that the interest rate could start to climb by the middle of the year. Considering the current anxiety around China, this could cause substantial capital outflows from the developing world back into the United States, hurting the prospects of Asian firms. Australian mining firms were also hit especially hard as the demand for precious metals dropped due to the tapering decision. The Nikkei closed down 1.65%, the Hang Seng closed down 1.79%, and the ASX 200 closed down 1.15%
European markets are moving in the same way as those elsewhere. There is worry that a reduction in stimulus will dampen demand for European goods in the US, while a corresponding raise in the interest rate on the dollar will pull money out of Europe as investors look to invest in higher yield US assets. Not surprisingly, the Stoxx 50 is currently down 0.42%, the FTSE is down 0.75%, and the DAX is down 0.56%.
American markets dropped yesterday after the FOMC announced that it would continue tapering the stimulus by another $10 billion. Though investors had been anticipating this, the sentiment was still bearish – especially as the Fed announced planes to increase the Federal Funds rate faster than expected. Thus, it is not surprising that the Dow closed down 0.70%, the S&P 500 went down 0.61%, and the Nasdaq went down 0.59%. Today, investors will be watching Existing Home Sales data coming out at 14:00 GMT for information on the strength of the US economy.
Asian markets have also dropped due to the tapering decision. However, the big source of decline in Asia was due to Yellen’s announcement that the interest rate could start to climb by the middle of the year. Considering the current anxiety around China, this could cause substantial capital outflows from the developing world back into the United States, hurting the prospects of Asian firms. Australian mining firms were also hit especially hard as the demand for precious metals dropped due to the tapering decision. The Nikkei closed down 1.65%, the Hang Seng closed down 1.79%, and the ASX 200 closed down 1.15%
European markets are moving in the same way as those elsewhere. There is worry that a reduction in stimulus will dampen demand for European goods in the US, while a corresponding raise in the interest rate on the dollar will pull money out of Europe as investors look to invest in higher yield US assets. Not surprisingly, the Stoxx 50 is currently down 0.42%, the FTSE is down 0.75%, and the DAX is down 0.56%.
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