Economy

Asian stocks sink for 2nd day after Wall Street slide

Asian stocks sink for 2nd day after Wall Street slide

Following the Federal Open Market Committee meeting, . the Fed said the target range for its benchmark funds rate now stands between 2-point-25 to 2-point-5 percent.

As JPMorgan notes in a report published last Friday, this year's peak-to-trough decline in the S&P 500 indicates a 30 per cent probability of a U.S. recession within the next three to six months, with some sectors in the index assigning a more than 50 per cent probability to a contraction in economic output within this period.

The latest fund manager survey published by Bank of America Merrill Lynch on Tuesday revealed that investors' allocation to global equities has fallen to a two-year low, triggering the largest-ever one-month rotation into bonds as inflationary pressures subside.

Trump made these remarks as the stock market has dropped significantly over the past two months.

Observing that neither the pace nor the ultimate destination of any further rate increases is predetermined, Powell said the Fed will adjust monetary policy as best it can to keep the expansion on track, the labour market strong and inflation near two per cent.

The rate increase, to a range of 2.25 percent to 2.5 percent, was the Fed's fourth this year. "Given that the market might see this coming, however, the black swan is most likely to come from another source", Leni explained.

Investors are growing anxious that global economic growth is cooling off and that the US could slip into a recession in the next few years. The Shanghai Composite share index was down almost 1% in afternoon trade while the yuan wad fixed 0.22% lower aginst the U.S. dollar.

Right now, markets are concerned about the potential for a slowing economy and two threats that could make the situation worse: the ongoing trade dispute between the USA and China, which has lasted most of this year, and rising interest rates, which act as a brake on economic growth by making it more expensive for businesses and individuals to borrow money. USA equities recorded their steepest declines for any Federal Open Market Committee announcement day since 2011, with the sell-off extending into Thursday as the threat of a government shutdown increased. The market took a nosedive that day.

And given recent developments, the statement notes that we will continue to monitor global economic and financial developments and assess their implications for the economic outlook. The Dow fell 464.06 points, or 2 percent, to 22,859.60 after sinking as much as 679.

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The Fed has said it's "close to done" and its decisions will be data dependent, while US equities remain "a tremendous value", Mnuchin said. But investors appeared to hope the Fed would unveil a sharper slowdown in interest rate hikes and other credit tightening policies because economic growth is likely to slow down. Treasury investors remained on edge after the Fed said quantitative easing was on "autopilot".

USA personal income and spending data are due Friday, along with a gauge of inflation. It has dropped 35 percent this year.

Oil Search, Woodside reversed early losses after the oil price bounced 0.8 per cent, and Santos was down 0.2 and one per cent.

In France, the CAC 40 lost 1.8 percent and Germany's DAX fell 1.4 percent.

Crude added to anxiety on financial markets, with the American benchmark sinking below US$47 a barrel.

United States crude eked out a 46-cent bounce in Asia on Friday to $US46.33 a barrel, while Brent was yet to trade at $US54.70.

The euro, meanwhile, hit a six-week high at $1.1486.

The Australian dollar slipped from last night's highs to trade at US71.10¢, up from US70.9¢ yesterday.

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