NEW YORK: Global stocks mostly fell Friday, with US markets notching their biggest losses since the Brexit vote, as US central bankers signaled they could hike interest rates as soon as this month.
With the Federal Reserve’s next policy meeting 11 days away, major US indices tumbled more than two percent, with the Dow falling nearly 400 points, at the rising spectre of tightening monetary conditions.
Markets were jolted when Boston Fed President Eric Rosengren said in a speech that higher rates were needed to prevent the economy from overheating.
A second Fed official, normally dovish Governor Daniel Tarullo, meanwhile signaled his openness to a rate hike in 2016 in a television interview.
The unexpected turn to a more pro-hike stance also weighed on markets in Europe, where sentiment was already downcast after the European Central Bank opted Thursday against expanding its stimulus program.
“Given the European Central Bank commentary yesterday as well as some Fed speakers today, it appears more likely that the Fed and the world is closer to lessening the amount of easy money,” said David Levy, portfolio manager at Republic Wealth Advisors.
Bourses in London, Paris and Frankfurt all lost one percent or more.
In Asia, the focus was on North Korea’s apparent test of a nuclear warhead that it claimed could be mounted on a missile.
Seoul’s KOSPI index fell almost 1.3 percent, while Sydney and Singapore each lost 0.9 percent.
Japan’s Nikkei index finished essentially flat as worries about North Korea were offset by speculation that the Bank of Japan may expand its stimulus program.
