Trump calls stock sell-off a correction, says Fed ‘crazy’

Cornelia Mascio
Ottobre 11, 2018

With significant drops in the Dow Jones Industrial Average, S&P 500, and broad-based stock market indexes, President Trump said markets are in a "correction", and decried the Federal Reserve's recent rises in interest rates and signals for more to come. "They're so tight. I think Fed has gone insane", president Trump replied.

"I don't like it", Trump said Tuesday at the White House, referring to the Fed's rate hikes, the most recent of which was September 26.

Currency investors took shelter in the safe-haven yen, resulting in steep losses for Japanese exporters, with electronics giant Sony down almost five percent as blue-chip firms flashed red across the trading board. USA consumer price inflation is now above 2 percent annually and the unemployment rate is the lowest in about 40 years. "I think the Fed is making a mistake", he said before a rally with his supporters in Erie, Pa.

The rout in United States shares followed substantial losses on European bourses, due in part to tensions between Brussels and Rome over Italian budget plans that have revived fears about the eurozone.

"There are a number of worries for investors right now, from the pace of rising bond yields and the impact on investor sentiment, to Italy's populist coalition playing a game of chicken with the European Commission, stalling Brexit negotiations and the ongoing trade conflict between the USA and China", said Craig Erlam, senior market analyst at Oanda trading group. "That suggests the Fed will keep raising rates, and that's taking the wind out of the stocks that have done the most, particularly in the tech sector". The S&P 500 was down 1.9 percent, and the tech-heavy Nasdaq saw losses of 2.3 percent.

On Wednesday, the Dow fell 831 points, or 3.1 percent, to 25,598.

Trump's comments echo his previous criticisms of recent months, which broke more than two decades of White House tradition of avoiding comments on monetary policy out of respect for the independence of the USA central bank.

The Fed has been raising interest rates gradually since December 2015, and last month lifted its target for short-term rates to a range of 2 per cent to 2.25 per cent, responding to an economy that has been growing at a pace well above what Fed officials believe is sustainable.

"It's shifting the tectonic plates", said Jack Ablin, chief investment officer at Cresset Wealth Advisors. The Dow lost more than 550 points in afternoon trading.

In other markets, oil prices fell on worries that Hurricane Michael will dent demand for gasoline and other petroleum products.

Altre relazioniGrafFiotech

Discuti questo articolo

Segui i nostri GIORNALE