On 18 September, 2015 – Most global markets declined on fears of global growth

Most stock indices retreated Friday after the Federal Reserve’s monetary policy announcement during the Thursday global market day. Now investors are worried about global growth.
United States
Fears over slowing global growth hammered stocks Friday and lifted prices of government bonds and other assets seen as safer bets. The slump came a day after the Federal Reserve decided to hold interest rates near zero instead of beginning the process of normalization. That means borrowing costs will remain low for a while yet, a prospect that has in the past typically helped stocks. The Dow Jones industrials dropped 1.7%, the S&P lost 1.6% and the Nasdaq retreated 1.4%. On the week, the Dow and S&P lost 0.3% and 0.2% respectively while the Nasdaq managed to edge up 0.1%.
Some investors, expecting the Fed would be confident enough to increase rates interpreted the stand-pat stance as a sign that the global economy was dangerously weak. Friday was quadruple witching when a host of options and futures contracts expired. This quarterly event can create a flurry of trading activity and can increase volatility. Other worries included third quarter corporate earnings and a deadlock in Congress raising the specter of a government shutdown next month.
Although low rates have helped fuel years of rising share prices in the US and around the world, markets drew little comfort from the decision. Many investors felt a rate rise would have signaled the central bank’s optimism about economic growth. The concern about global economic growth raised by the Fed’s statement weighed on the price of oil, dragging down shares of energy companies.
Among US stocks making big moves, JPMorgan Chase and Citigroup declined as investors judged that lower interest rates for longer mean banks won’t be able charge more for loans. Goldman Sachs Group also declined. La Quinta sank after the hotel company announced late Thursday that its chief, Wayne Goldberg, had stepped down after almost a decade in charge. The company also lowered its 2015 sales forecast due to weak demand in August and September.
Gold at the afternoon London fixing was up US$24.00 to US$1,141.50. Copper futures were down 2.7% to US$2.39. WTI spot crude was down US$2.22 to US$44.68. Dated Brent spot crude was down US$1.61 to US$47.47. The US dollar was up against the euro, pound, Swiss franc and the Canadian dollar. However, it declined against the yen and the Australian dollar. The Dollar Index was up 0.8%. The yields on US Treasury 30 year bond and the 10 year note were down 7 basis points to 2.94% and 2.13% respectively.
Europe
European markets ended Friday’s session solidly lower. The US Federal Reserve announced after the European close yesterday that it would maintain its fed funds rate at record near zero. For the first time, the Fed added the phrase that it was “monitoring developments abroad” to its statement. This in turn had investors concerned about the health of the global economy. The FTSE was down 1.3%, the CAC dropped 2.6%, the DAX lost 3.1% and the SMI retreated 1.2%. On the week, The FTSE was down 0.2%, the CAC declined 0.3%, the DAX dropped 2.0% and the SMI slid 0.4%.
Traders will be watching for the results of the Greek election Sunday. With 70 percent of the vote counted, Syriza was well ahead of the New Democracy party. Syriza is projected to be just short of a majority but the Independent Greeks have agreed to join a coalition.
RWE and E.ON dropped. Banks including Deutsche Bank, Commerzbank, Barclays, HSBC, Lloyds Banking, Royal Bank of Scotland and Standard Chartered declined. In Paris, BNP Paribas, Société Générale and Credit Agricole also retreated. Automakers Daimler, BMW, Volkswagen, Renault and Peugeot were down. Randgold Resources and Fresnillo gained 3but Glencore declined. Shares in Royal Dutch Shell, BP, Anglo American and BG Group retreated.
Asia Pacific
Asian stocks were mixed after the Federal Reserve’s decision to keep interest rates on hold. The decision helped ease fears of capital flight from emerging markets. Nevertheless, gains were muted as the Fed’s cautious stance as well as dovish comments from Fed chair Janet Yellen raised new questions about US fundamentals and the strength of the global economy.
Chinese shares rose in response to positive house price data. The Shanghai Composite was up 0.4% while the Hang Seng added 0.3%. Home prices in majority of the Chinese cities rose for the fourth straight month in August, as easing of home purchase restrictions and interest rate cuts supported housing demand. Average new home prices increased 0.3% from July. On the week, the Shanghai Composite lost 3.2% while the Hang Seng was 1.9% higher.
The Nikkei lost 1.4% and was down 1.1% last week as the yen ticked up against the dollar, hurting exporter shares. There also was profit taking and position adjustment selling ahead of the long holiday weekend. Among exporters, Canon, Nikon, Panasonic and Sony declined. Energy explorer Inpex and JX Holdings slipped after both Brent and US crude futures fell on Thursday in volatile trading. Electronics maker Kyocera tumbled on news it will acquire Germany’s Ceyoniq Group for more than ¥5 billion. Banks Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group and Mizuho Financial Group were down. The minutes from the Bank of Japan’s August meeting showed that board members were concerned about the risks posed by a prolonged slowdown in China and other emerging economies.
The S&P/ASX added 0.5% and the All Ordinaries was up 0.4% after RBA Governor Glenn Stevens presented an optimistic view about the Australian economy and said that the bank was “pretty content” with its current benchmark rate. Banks advanced while miners declined. The S&P/ASX and All Ordinaries were up 2.0% and 1.9% respectively for the week. The Kospi advanced 1.0% for the day and 2.8% for the week. The Sensex also added 1.0% on the day and 2.4% for the week.
Global Stock Market Recap

Please remember, the value of investments and the income from them can do down as well as up. Funds that invest in overseas markets may be subject to currency fluctuations. Investments in small and emerging markets can be more volatile than other overseas markets. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only.
Looking forward*
Monday — Germany posts August producer price index. In the US, August existing home sales will be released.
Tuesday — Australia reports second quarter residential property prices. In the US, August FHFA house prices and the September Richmond Fed manufacturing index are on tap.
Wednesday — China’s September flash manufacturing PMI will be released. Flash September composite PMIs will be reported for the Eurozone, Germany and France. The September flash manufacturing PMI will be released for the US.
Thursday — Japan’s September flash manufacturing PMI will be reported. Germany’s September Ifo survey is on tap. In the US, September durable goods orders and the weekly jobless claims, money supply and Fed balance sheet will be reported. Fed Chair Janet Yellen speaks at 5:00 PM US EDT.
Friday — Japan releases August consumer price index. The Eurozone reports August M3 money supply. In the US, final second quarter gross domestic product will be reported along with final September consumer sentiment.
*Note — all releases are listed in local time.