Global Exchanges Plummet ahead of Fed Meet

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  • TEMPO.CO, London – The Federal Reserve's plan to hold a meeting to assess the possibility of raising its key interest rate triggered negative sentiments in global stock markets. In yesterday's trade, global bourses slumped to its lowest level in the past month.

    Investors are waiting to see whether The Fed will raise interest rates sooner than estimated. Barclays research director Henk Potts said there are speculations that the Fed will raise interest rates sooner than expected.

    "In the short term, there is potential for a pullback as investors, who have been used to cheap cash and soothing words from central bankers, may have some uncomfortable side effects," Potts told Reuters.

    Potts hopes the Fed does not raise interest rates until next year. But strong economic data in the United States leads to expectations that Fed officials will raise rates soon.

    The MSCI index, which includes shares in 45 countries, yesterday closed 0.2 percent lower after hitting its lowest level since mid-August at the start of the session. The FTSE Eurofirst 300 also edged down, closing 0.4 percent lower. Political situations in Scotland also sparked concerns among market participants, causing the index to declline.

    Asian markets were not spared. Outside the Japanese market, the MSCI index for Asia Pacific fell 0.7 percent to its lowest point at the end of June, a correction of nine consecutive days.  

    Japan's Nikkei 225 index closed 0.23 percent lower to at 15,911.53 after five days of gains. The Singapore's Straits Times Index fell 1.20 percent to 3,272.62, while Hong Kong's Hang Seng index slipped 0.9 percent to 24,136.01. In Indonesia, the Jakarta Composite Index (JCI) lost 14 points (0.3 percent), closing at 5,130.