Stock markets tumble amid U.S. Federal Reserve's global growth worries
Stock markets around the world lost ground Friday as investors appeared to struggle with concerns voiced yesterday by the U.S. Federal Reserve about the health of the global economy.
The Fed left its key interest rate unchanged on Thursday. That news was initially welcomed by the markets. But as the day wore on, investors decided to pay more attention to the reason why it left rates unchanged.
In its accompanying policy statement, the Fed said it was worried that "recent global economic and financial developments may restrain economic activity somewhat."
"For the markets, it means more months of uncertainty, which investors do not like," said Craig Erlam, senior market analyst at OANDA.
The benchmark stock indices in Canada and the United States opened significantly lower on Friday and stayed in the red all day, following significant drops in European markets.
The S&P/TSX composite index fell 140 points, or 1.0 per cent, to close at 13,647, while the Dow Jones industrial average slid 290 points, or 1.7 per cent, to end the day at 16,385.
The German DAX index lost 3.1 per cent, while the CAC-40 in France fell 2.9 per cent and Britain's FTSE 100 was 1.4 per cent lower. In Japan, the Nikkei dropped almost 2.0 per cent.
Oil futures plunged $2.22 to settle at $44.68 US a barrel as traders reacted to the Fed's concerns over economic growth. That led to a drop of 1.6 per cent in the energy sector of the TSX. The heavily weighted financial sector also lost ground.
The Canadian dollar shed its early gains and closed down a quarter of a cent at 75.66 cents US.
