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Global stocks hit by oil plunge, Fed's reminder it's on course to hike interest rates

TOKYO – Global shares fell Thursday after oil prices plunged and the Federal Reserve issued a reminder it is still on track to raise interest rates this year. The release of weaker-than-expected retail sales figures in Japan was another reason for gloom.

KEEPING SCORE: Germany’s DAX fell 0.4 per cent to 10,663.54 and France’s CAC-40 lost 0.7 per cent to 4,576.85. Britain’s FTSE 100 fell 0.8 per cent to 6,771.95. Wall Street looked set for gains after two days of losses. Dow future were up 0.3 per cent at 17,144 and S&P 500 futures added 0.2 per cent to 1,994.70.

FED MEETING: The Federal Reserve issued its first policy statement of the year, making clear that it would remain “patient” in raising interest rates from near zero, which was expected. But it also strengthened its assessment of the U.S. economy, noting it is expanding at a solid pace and generating strong job growth.

THE QUOTE: “The fact is no one knows when a rate hike will occur,” IG’s chief market strategist Chris Weston said in a commentary. “And, while the Fed would like to be in a position to raise, the lessons of 1938 still haunt them: raising rates too early caused the second leg of the Great Depression.”

WHITHER ABENOMICS: The 0.3 per cent month-on-month drop in Japan’s retail sales in December may just reflect weaker gas prices, but core spending was also sluggish during one of the busiest shopping seasons of the year, economists said. The data adds to doubts about whether Prime Minister Shinzo Abe’s policies to revive the long stagnant Japanese economy are delivering the goods.

ALIBABA ALARM: A scathing report by Chinese regulators accusing e-commerce giant Alibaba of failing to prevent fake goods from being sold on its websites pushed its share price sharply lower. Further muddying the water was a disclosure that the report was delayed to avoid affecting Alibaba’s $25 billion New York stock market listing. Alibaba’s shares fell 4.5 per cent Wednesday.

ASIA SCORECARD: Japan’s Nikkei 225 slipped 1.1 per cent to 17,606.22 and Hong Kong’s Hang Seng fell 1.1 per cent to 24,595.85. The Shanghai Composite shed 1.3 per cent to 3,262.30. South Korea’s Kospi was 0.5 per cent lower at 1,951.02. Australia’s S&P/ASX 200 added 0.3 per cent to 5,569.50. Markets in Southeast Asia were mostly lower.

OIL ROUT: Benchmark U.S. lingered near six-year lows after the U.S. Energy Department reported oil inventories rose to their highest levels ever recorded. The contract was down 19 cents to $44.25 a barrel in electronic trading on the New York Mercantile Exchange. It lost $1.78 to close at $44.45 a barrel in New York on Wednesday. As recently as June, it traded above $100. Its decline reflects oversupply and weakening growth in major economies.

CURRENCIES: The dollar rose to 117.79 yen from 117.73 yen the previous day. The euro rose to $1.1293 from $1.1286.

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