NEW YORK – Global stocks mostly fell and the dollar strengthened Thursday amid unease over rising US interest rates and uncertainty about President Donald Trump’s agenda.
Equity markets in Europe, the US and much of Asia all pulled back, while the dollar advanced on the Fed news and the British pound briefly spiked after a number of members of the Bank of England’s monetary policy committee unexpectedly supported an interest rate hike.
The Fed Wednesday lifted benchmark interest rates, signaled one more hike was likely in 2017, and reaffirmed that it would begin this year to reduce its massive investment holdings.
Fed Chair Janet Yellen gave an upbeat appraisal of the economy, largely brushing off a spate of mixed data on consumption and inflation.
“The Fed was unequivocally hawkish,” said AxiTrader chief market strategist Greg McKenna.
Trump’s travails also weighed on markets following reports the US president is being investigated personally for obstruction of justice.
In New York, the sharpest decline was in the Nasdaq, which lost 0.5 percent, as tech shares again pulled back after the index scored a spate of records earlier this month.
London fell 0.7 percent, Paris 0.5 percent and Frankfurt 0.9 percent.
While the BoE, as widely expected, kept its interest rates at a record low 0.25 percent, the vote was 5-3, which surprised markets and analysts as only one member had advocated a rate hike at the previous meeting.
The BoE forecast inflation would surge further above its 2-percent target in the coming months. The fall in the value of the pound after the Brexit vote last year has fueled consumer price rises.
The British pound, which had slid under $1.270 before the decision was announced, shot up to $1.2795 after the BoE. Near 2100 GMT (5 a.m. in Manila), it was at $1.2756.
Kallum Pickering, senior UK Economist at Berenberg Bank, said “despite elevated political and economic uncertainty, the Bank of England seems to be heading for a first rate hike soon.”
But Omer Esiner, analyst at Commonwealth Foreign Exchange, said “investors still see any near-term policy tightening by the BOE as unlikely.”
He noted that “the potential for a more difficult and contentious negotiation period with the EU remains a potential headwind for the pound over the medium term.”
KEY FIGURES (as of 5am Friday in Manila)
New York – Dow: DOWN 0.1 percent at 21,359.90 (close)
New York – S&P 500: DOWN 0.2 percent at 2,432.46 (close)
New York – Nasdaq: DOWN 0.5 percent at 6,165.50 (close)
London – FTSE 100: DOWN 0.7 percent at 7,419.36 points (close)
Paris – CAC 40: DOWN 0.5 percent at 5,216.88 (close)
Frankfurt – DAX 30: DOWN 0.9 percent at 12,691.81 (close)
EURO STOXX 50: DOWN 0.5 percent at 3,528.48
Tokyo – Nikkei 225: DOWN 0.3 percent at 19,831.82 (close)
Hong Kong – Hang Seng: DOWN 1.2 percent at 25,565.34 (close)
Shanghai – Composite: UP 0.1 percent at 3,132.49 (close)
Euro/dollar: DOWN at $1.1147 from $1.1220 at 2100 GMT
Pound/dollar: DOWN at $1.2756 from $1.2758
Dollar/yen: UP at 110.93 yen from 109.54 yen
Oil – West Texas Intermediate: DOWN 27 cents at $44.46 per barrel
Oil – Brent North Sea: DOWN 8 cents at $46.92 per barrel
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