Global Stocks Tumble After Trump’s `Crazy’ Federal Reserve Comment
Asian markets plunged on Thursday following the worst session on Wall Street for months, as US President Donald Trump said the Federal Reserve had “gone crazy” with plans for higher interest rates.
The Tel Aviv Stock Exchange was down more than two percent, Shanghai plummeted nearly 5% while Tokyo and Hong Kong both shed around 4%, as investors fretted about surging interest rates and the ongoing US-China trade war.
“All bets are off,” warned Stephen Innes, head of Asia-Pacific trading at OANDA, adding that markets were “fraught with peril.”
“The US equity bloodbath is taking no prisoners in Asia as a sea of red greets investors at the open, as equity deleveraging and liquidation intensifies,” he said.
Taipei and the Shenzhen Composite Index — which tracks stocks on China’s second exchange — were both down around 6%.
Seoul fell more than 4% and Sydney and Singapore both dropped more than 2.5%.
The steep drop in Asia followed Wednesday’s plunge in New York, with the Dow Jones dropping nearly 830 points — the biggest fall since February — after Trump’s latest criticism of the Federal Reserve.
“I think the Fed is making a mistake,” Trump told reporters as he arrived for a campaign rally ahead of the US mid-term elections.
“I think the Fed has gone crazy,” he said.
Trump has repeatedly touted Wall Street records as proof of the success of his economic program. But he downplayed the first major drop in months, saying it was a “correction that we’ve been waiting for.”
But International Monetary Fund chief Christine Lagarde hit back on Thursday, defending rate hikes that she said were justified by fundamentals.
“It is clearly a necessary development for those economies that are showing much improved growth, inflation that is picking up… unemployment that is extremely low,” she told reporters in Bali where the Fund is meeting.