Newspaper article The Journal (Newcastle, England)

FTSE Tumbles as Investors React to US Stocks Fall; FTSE 100 Tom Daniels Brewin Dolphin

Newspaper article The Journal (Newcastle, England)

FTSE Tumbles as Investors React to US Stocks Fall; FTSE 100 Tom Daniels Brewin Dolphin

Article excerpt

LONDON'S FTSE 100 index dropped over 1.3% to 6104 in late afternoon trading, as US stocks started with hefty falls, with investors spooked by the uncertainty and global growth worries raised by the Federal Reserve on Thursday, when it decided to leave US interest rates on hold.

Whilst the Fed does not ordinarily gear its monetary policy towards external markets, they can't ignore what is happening in the emerging markets and the impact this is having on the US.

In the Fed's statement, weakness in emerging markets and tepid inflation numbers were, unsurprisingly, the chief reasons for the decision.

However, as with all economic releases, there are at least two ways of looking at the unchanged interest rate decision; it is good news as businesses can continue to enjoy cheap borrowing and hence a bounce in equities or, on the downside, the economic recovery is not yet far enough advanced to be able to handle an increase in rates. It seems that investors have focused on the latter, with markets selling off. …

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