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Global stocks slip after Fed Powell's remark, dollar near five-week high

Comments from the Federal Reserve's new chief rekindled fears about the pace of US monetary tightening this year, sending Wall Street tumbling

Reuters  |  Tokyo 

Federal Reserve Chair Jerome Powell
Federal Reserve Chair Jerome Powell

Asian stocks skidded on Thursday after comments from the Federal Reserve's new rekindled fears about the pace of US monetary tightening this year, sending Wall Street tumbling for its worst performance in two years and lifting the

For weeks investors have been on edge, with the recent rout in equities cascading through financial amid concerns higher interest rates in advanced economies, led by the United States, could dent world growth.

Fed Jerome Powell, in his first public appearance as of the US central bank, vowed on Tuesday to prevent the from overheating while sticking with a plan to gradually raise interest rates.

That was enough to send investors out of stocks, with MSCI's broadest index of shares outside down 0.35 percent.

Australian stocks fell 0.8 percent and Japan's Nikkei dropped 0.85 percent.

The losses came amid a broad selloff on Wall Street, where the Dow and capped their worst months since January 2016 overnight.

The Fed's last round of economic projections in December pointed to three rate increases this year, but Powell's testimony before the U.S. House of Representatives' Financial Services Committee, prompted investors to increase bets on four rate increases in 2018.

The got a lift on Powell's comments. The index against a basket of six major currencies rose to 90.698 overnight, its highest since Jan. 23 and last stood at 90.681.

The index has managed to claw back from a three-year low of 88.253 set in mid-February amid fears of a ballooning U.S. budget deficit and lingering worries that could pursue a weak policy took a toll.

"The comeback by the could negatively impact and in turn cool expectations. In that case, the equity could be forced to undergo significant adjustments," said Makoto Noji, at in

U.S. stood little changed at $61.63 per barrel after sliding more than 2 percent overnight.

A stronger greenback tends to weigh on commodities including crude, as it makes it more expensive for non-U.S. buyers of the dollar-denominated products.

The was steady at $1.2192 and in close reach of a 1-1/2-month low of $1.2188 plumbed the previous day. The common came under pressure after data on Wednesday showed zone slowing to a 14-month low and underscored the European Central Bank's caution in removing monetary stimulus.

The Australian was flat at $0.7763 after dipping to $0.7756, its lowest since late December.

Long-term US Treasury yields stood little changed at 2.864 percent after declining about 3 basis points overnight on month-end purchases by investors rebalancing their portfolios and weaker Wall Street shares.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Thu, March 01 2018. 07:26 IST