Global stock markets slide ahead of Fed meeting

BEIJING, China – Global stocks fell Tuesday as jittery investors awaited the U.S. Federal Reserve’s decision on interest rates and worried about Britain’s vote on whether to leave the European Union.

KEEPING SCORE: France’s CAC-40 was down 1.3 per cent to 4,171 and Germany’s DAX retreated 0.6 per cent to 9,599. London’s FTSE 100 declined 1.2 per cent to 5,970. Wall Street looked set for more declines, with futures for the Dow Jones industrial average and the Standard & Poor’s 500 both down 0.1 per cent.

FED WATCH: The Fed had been expected to raise interest rates but now appears likely to wait and see how economic changes develop. The central bank’s two-day meeting starts Tuesday, with a decision on interest rates Wednesday. Last month, many investors were betting that the Fed would hike rates, but the most recent monthly U.S. jobs reports were weaker than expected, putting a damper on those expectations.

BREXIT: Stocks are under pressure from uncertainty about whether British voters will choose to leave the European Union in a June 23 referendum. Polls show the vote could go either way and investors are starting to worry about the consequences. A British exit from the EU, known informally as Brexit, would likely hurt the British economy most and destabilize the rest of Europe. The repercussions, however, are not clear and investors are reacting to the general uncertainty over the situation.

CHINA WEAKNESS: Factory output and investment in May were weaker than expected, hurt by slow foreign and domestic demand. Industrial production held steady at 6 per cent. Growth in investment in factories and other fixed assets weakened to 9.6 per cent in the January-May period from 10.5 per cent for the four months through April. “Momentum appears to be stalling after a solid start to 2016,” said Mizuho Bank in a report.

ASIA’S DAY: Japan’s Nikkei 225 index lost 1 per cent to 15,859.00 and Sydney’s S&P-ASX 200 lost 2.1 per cent to 5,203.30. Seoul’s Kospi retreated 0.4 per cent to 1,972.03, Hong Kong’s Hang Seng shed 0.6 per cent to 20,387.53 and India’s Sensex lost 0.3 per cent to 26,319.00. Benchmarks in New Zealand, Singapore and the Philippines also declined. The Shanghai Composite Index gained 0.3 per cent to 2,842.19.

ENERGY: Benchmark U.S. crude dropped 66 cents to $48.22 per barrel in electronic trading on the New York Mercantile Exchange after the International Energy Agency said that prices were unlikely to rise significantly in the future due to large inventories and production increases. Brent crude, used to price international oils, fell 66 cents to $49.69 per barrel in London.

CURRENCY: The dollar declined to 105.87 yen from Monday’s 105.96 yen. The euro edged down to $1.1223 from $1.1293.