Global market update: US stock market witnessed sharp correction on Friday as all three key benchmark indices Nsadaq, Dow Jones and S&P 500 lost heavily on Friday. Dow Jones Index ended 0.83 per cent lower, S&P 500 lost 1.22 per cent whereas tech heavy weight Nasdaq corrected 1.56 per cent. The S&P 500 and the Nasdaq reversed their weekly advances, while the blue-chip Dow ended the week nominally higher.
US Fed meeting in focus
Pointing towards US Fed meeting behind this sharp fall on Wall Street, Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana said, “There’s a tug of war going on between those who think inflation and interest rates are going to come down and the Fed is going to start cutting rates next year, and those who believe that inflation is going to stay well above the Fed target for a while and therefore rates will stay higher for longer.”
On reason for US Fed interest rate buzz, Sugandha Sachdeva, Executive Director & Chief Strategist at Acme Investment Advisors said, “There is increasing belief that the US Federal Reserve will implement another interest rate hike by the end of this year. This sentiment stems from the release of robust macroeconomic data, painting a positive picture of the US economy.”
“If we get a pause in September and November, that could lead to a nice year-end rally, which will feed the belief that the next move by the Fed will be a rate cut in 2024,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.
Treasury yields rose ahead of the Federal Reserve policy meeting next week, with two-year yields edging above the 5% threshold amid worries that restrictive interest rates will be in place for longer than expected.
European stocks closed higher, extending a rally sparked by the European Bank signaling an end to its rate-hiking cycle, and logging a weekly gain.
The pan-European STOXX 600 index rose 0.23% and MSCI’s gauge of stocks across the globe shed 0.63%.
Emerging market stocks rose 0.33%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.58% higher, while Japan’s Nikkei rose 1.10%.
(With inputs from Reuters)
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Updated: 16 Sep 2023, 09:27 AM IST