Wednesday, 24 October, 2018

Trump calls stock sell-off 'a correction,' says Federal Reserve is 'crazy'

The Dow took a beating Wednesday I don't like Fed raising interest rates so quickly, says Trump
Priscilla Morrison | 11 October, 2018, 10:02

President Trump blamed the plummeting stock market Wednesday on Federal Reserve policy that has raised interest rates six times since he took office, most recently in September.

Ahead of a campaign rally for the U.S. mid-term elections, Trump told reporters: "I think the Fed is making a mistake".

Taiwan plunged almost 6%, with Seoul down 3% and Sydney and Singapore both falling 2% after US Donald Trump said the Federal Reserve had "gone crazy" with plans for higher interest rates.

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.

After a long stretch of relative calm, the stock market has suffered sharp losses over the last week as bond yields surged.

The broad US stock market sell-off Wednesday took the S&P 500 to the lowest in three months, the Dow Jones Industrial Average plunged as much as 836 points and the Nasdaq 100 Index tumbled more than 4 percent for its worst day in seven years. The Dow and the S&P 500, the benchmark for many index funds, both lost more than 3 per cent, and the NASDAQ fell more than 4 per cent.

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In fact it is his policies that are behind the changes: tax cuts and spending policies are expected to juice the economy, adding to the Fed's justification to raise interest rates, while trade conflicts raise costs for companies, which could hit the bottom line in quarterly earnings - something analysts said helped prompt Wednesday's sell-off.

The markets have been on a historic climb - with the Dow and S&P each notching dozens of new highs since 2016 - buoyed by a strong US economy and solid corporate earnings.

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.

"The Fed is making a mistake", he told reporters on Wednesday as he arrived in Pennsylvania for a campaign rally. "The Fed has gone insane".

"It's shifting the tectonic plates", said Jack Ablin, chief investment officer at Cresset Wealth Advisors. "But I really disagree with what the fed is doing. OK?" Berkshire Hathaway dipped 4.7 percent to $213.10 and reinsurer Everest Re slid 5.1 percent to $217.73.

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