Global Stocks Plunge After Wall St. Fall on Rate Hike

Global stock prices plunged Thursday, following Wall Street down after the Federal Reserve raised U.S. interest rates.

In early trading, France’s CAC 40 index fell 1.4 percent to 4,709.13 and Germany’s DAX lost 1.3 percent to 10,620,79. London’s FTSE 100 retreated 1.2 percent to 6,682.26. On Wednesday, the FTSE 100 rose 1 percent, the DAX added 0.2 percent and the CAC 40 rose 0.5 percent. On Wall Street, futures for the Dow Jones Industrial Average and the Standard & Poor’s 500 index both fell 0.6 percent.

Tokyo’s Nikkei 225 lost 2.8 percent to 20,392.58 after being down 3.2 percent at one point. The Shanghai Composite Index retreated 0.5 percent to 2,536.27 and Hong Kong’s Hang Seng gave up 1 percent to 25,615.85. Seoul’s Kospi shed 0.9 percent to 2,060.09 and Sydney’s S&P-ASX 200 declined 1.3 percent to 5,505.80. India’s Sensex lost 0.4 percent to 36,334.07. New Zealand and Malaysia advanced while Taiwan and other Southeast Asian markets retreated.

The Fed raised its key interest rate for a fourth time this year to reflect U.S. economic strength and said it plans more increases next year. That lifted the Fed’s benchmark rate to its highest level since the 2008 global financial crisis. The Fed said it expects two rate increases next year instead of three. Investors were disappointed Chairman Jerome Powell failed to go further in indicating a slowdown in the pace of increases.

With headwinds to growth and inflation stabilizing, “the Fed can afford to slow down from here,” said Shane Oliver of AMP Capital in a report. “A more cautious Fed should provide some support for markets, although more falls are possible into early next year before markets bottom and head higher as investors realize the U.S./global economy is not going into recession soon.”

Benchmark U.S. crude lost $1.12 to $47.05 per barrel in electronic trading on the New York Mercantile Exchange. The contract jumped $1.57 on Wednesday to close at $48.17. Brent crude, used to price international oils, retreated $1.09 to $56.15 per barrel in London. It gained 98 cents the previous session to close at $57.24.

The dollar declined to 111.89 yen from Wednesday’s 112.44 yen. The euro gained to $1.1430 from $1.1375.