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Markets tumble despite Fed signaling fewer hikes next year
The Federal Reserve statement, after the central bank raised the federal funds rate a quarter point for the fourth time this year, was deemed not dovish enough by markets as the Fed projected 2 rate hikes in 2019, down from 3 seen earlier. The SP 500 sank 7.1% and the ICE US dollar index fell 0.5%.
All major stock indexes ended sharply lower. Nasdaq composite suffered the biggest loss: it tumbled 8.4%, joining Nikkei in a bear market territory. Only Canadian and Australian dollars out of six major currency pairs didn’t reverse previous week’s dynamics while the range of fluctuations rose. The Australian dollar was the leader in terms of percentage change: it extended losses 1.8% against the US dollar.
There are no signs market volatility will subside this week with expected low volume trading as several financial markets close for Christmas holidays. The German inflation preliminary report is the major economic event this week with consumer prices seen rising in Europe’s largest economy.
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