Global stocks battered amid US budget brawl, Brent at $55
AFP – Global stocks plunged Thursday as worries about a possible US government shutdown compounded fears of slowing global growth that pushed oil prices to fresh multi-month lows.
Even before the specter of a US government shutdown reappeared, European and Asian bourses had fallen sharply after the US Federal Reserve again raised interest rates on Wednesday.
But US stocks retreated further on news of the latest impasse between President Donald Trump and congressional lawmakers on a stopgap budget bill over border security funding.
The Dow Jones Industrial Average closed the day 2.0 percent lower at 22,859.60, a loss of 460 points.
A bruising December has set up Wall Street for its worst year since the financial crisis. The S&P 500 is currently down 7.7 percent for the year and the Nasdaq is on the verge of a "bear market," which is a drop of 20 percent from its peak this year.
The revived possibility of a shutdown — which also weighed on the US dollar — worsened the downbeat mood on markets after the Fed announced another interest rate hike on Wednesday and made only subtle adjustments to the course of monetary policy tightening next year despite rising worries about global growth and a big pullback in the stock market.
However, US Treasury Secretary Steven Mnuchin said the market’s response to the Fed went too far.
"I think clearly you have a situation here where the market has overreacted to the Fed’s comments, and you see programmed trading taking over," Mnuchin said in an interview with Fox Business News.
And he said if inflation remains low, the Fed may not need to raise rates next year, even though the median forecast of central bankers is for two more increases.
Analysts also said the US indictment of two Chinese hackers tied to Beijing’s security services reminded investors of the unsettled state of US-China trade relations.
"We have a trade war, the economy weakening, and now the possibility of a shutdown," said Peter Cardillo of Spartan Capital Securities. "All that is feeding by itself."
Earlier, the Nikkei plunged to a 15-month low after the Dow struck its lowest level of 2018 on Wednesday.
– Oil falls further –
In Europe, London’s benchmark FTSE 100 index slid 0.8 percent, with losses capped by stronger-than-expected UK retail sales data.
In the eurozone, Frankfurt’s DAX 30 shed 1.4 percent and the Paris CAC 40 slumped 1.8 percent. Both are near lows for the year.
Oil prices meanwhile continued to retreat on mounting worries over global growth.
US benchmark West Texas Intermediate slumped nearly five percent to $45.88 a barrel, its lowest level since July 2017.
On the corporate front, shares in Airbus plunged nearly 10 percent after French daily newspaper Le Monde said the European aircraft maker could face fines of several billion dollars under a US corruption probe, before recovering somewhat to end the day down 4.4 percent.
On Wall Street, Altria finished 1.9 percent lower after announcing it will buy a 35 percent stake in popular e-cigarette maker Juul for $12.8 billion, betting on a key growth market amid declines in conventional cigarette sales.
– Key figures around 2200 GMT –
New York – Dow: DOWN 2.0 percent at 22,859.60 (close)
New York – S&P 500: DOWN 1.6 percent at 2,467.42 (close)
New York – Nasdaq: DOWN 1.6 percent at 6,528.41 (close)
London – FTSE 100: DOWN 0.8 percent at 6,711.93 (close)
Frankfurt – DAX 30: DOWN 1.4 percent at 10,611.10 (close)
Paris – CAC 40: DOWN 1.8 percent at 4,692.46 (close)
EURO STOXX 50: DOWN 1.7 percent at 3,000.06 (close)
Tokyo – Nikkei 225: DOWN 2.8 percent at 20,392.58 (close)
Hong Kong – Hang Seng: DOWN 0.9 percent at 25,623.53 (close)
Shanghai – Composite: DOWN 0.5 percent at 2,536.27 (close)
Euro/dollar: UP at $1.1450 from $1.1376 at 2200 GMT
Dollar/yen: DOWN at 111.24 yen from 112.48 yen
Pound/dollar: UP at $1.2659 from $1.2610
Oil – Brent Crude: DOWN $2.76 at $54.48 per barrel
Oil – West Texas Intermediate: DOWN $2.29 at $45.88 per barrel