From the Associated Press:
The U.S. Federal Reserve’s tacit acknowledgment that America’s economic slowdown is likely to persist for quite a while sent global stock markets skidding Thursday as investors brushed off the central bank’s efforts to spur growth and focused instead on its gloomy assessment.
Oil tumbled too but the dollar held its own against the euro, which has been weighed down in recent weeks over concerns that Greece might go bankrupt. Hong Kong’s Hang Seng led the retreat lower earlier during the Asian session with a near 5 percent dive.
The losses began Wednesday afternoon in the U.S. after the Fed announced a highly anticipated program to trade in $400 billion worth of short-term bonds for the same amount of longer-term bonds. The goal is to ensure low borrowing rates for a long period, thereby helping to stimulate the housing market and other economic activity.
The program–known as Operation Twist–was bigger than expected, but that seemed to work against the Fed’s purposes: Investors took it as a signal that the central bank was growing more concerned about the economy. In its statement, the Fed noted “significant downside risks to the economic outlook, including strains in global financial markets.”
“Confidence was already shaky, at best, and the Fed’s words only heightened worries about the outlook,” said Benjamin Reitzes, an analyst at BMO Capital Markets.
In mid-afternoon trading in Europe, France’s CAC-40 was down a hefty 5.4 percent at 5,186 while Germany’s DAX slid 4.6 percent to 5,185. The FTSE index of Britain’s leading shares was down 4.9 percent at 5,027.
Wall Street was also set for big losses at the open soon–Dow futures were 2.3 percent lower at 10,752 while the broader Standard & Poor’s 500 index futures fell 2.6 percent to 1,126.
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