Global stocks fall as US Fed is second-guessed

23 Dec 2015 | Author: | No comments yet »

Global stocks fall as US Fed is second-guessed.

DISNEY DOWN:Despite US$57 million in ticket sales for the new ‘Star Wars’ film, the entertainment firm saw its shares fall 3.8 percent, blamed on its ESPN division Global stocks ended the week with a thud on Friday as investors second-guessed the US Federal Reserve’s landmark interest rate hike and focused again on the oil rout. NEW YORK — Stocks plunged across all sectors in the heaviest trading of the year Friday as enthusiasm over a long-awaited increase in U.S. interest rates faded. Friday’s trade marked an extension of Thursday’s US session, where stocks also fell sharply one day after the Fed lifted interest rates for the first time in almost a decade.

The market has been rethinking whether the initial wave of optimism about the Fed was overbaked. “While Wednesday’s Fed rate hike removed one cloud of uncertainty from the markets … speculation about when the next one is likely to occur is not expected to remain too far away,” said Michael Hewson, chief market analyst at trading group CMC Markets UK. In the US, the biggest losses came in the Dow Jones Industrial Average, which shed 2.1 percent, with big companies including Apple Inc, Boeing Co, JPMorgan & Chase Co, Procter & Gamble Co and Microsoft Corp all losing between 2.7 percent and 4.1 percent. Another drop in energy prices sent oil stocks lower again, and worries about weak global growth weighed on shipping and other transportation companies. Japan’s central bank announced some changes to its stimulus program, saying it will spend a bit more on exchange-traded funds for companies that increase hiring and investment. Financial media cited investor uncertainty about the impact of reforms by business-friendly Argentine President Mauricio Macri in his first week in office.

Investors were disappointed the Bank of Japan didn’t take further action, according to Ryan Larson, head of U.S. equity trading for RBC Capital Markets. But over the next two days, stocks were hit by some of the worries that have dogged them all year, like weakness in the Chinese economy, slowing global growth, and skidding prices for energy and metals. U.S. stock trading was even more volatile than usual Friday because of the simultaneous expiration of several kinds of futures and other contracts that investors use to place bets on indexes and individual stocks.

RERUNS: The global market went through a similar slump about two weeks ago, when the European Central Bank ramped up its stimulus efforts, but didn’t do nearly as much as expected. Those slumps show that investors will continue keeping an eye on the words and deeds of central banks in struggling Europe and Japan as well as the U.S. for the foreseeable future. Transocean gave up 74 cents, or 5.7 percent, to $12.26, while Ensco lost $1.08, or 7 percent, to $14.31, and Diamond Offshore Drilling dipped 70 cents, or 3.3 percent, to $20.47.

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