Published: Thu, October 11, 2018
Money | By Ralph Mccoy

Trump calls stock sell-off a correction, says Fed ‘crazy’

Trump calls stock sell-off a correction, says Fed ‘crazy’

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.

Despite last night's sell-off, the S&P 500 would still need to more than double its losses.

Trump, who has been critical of the central bank's interest rate increases, tells reporters after landing in Erie, Pennsylvania, that he thinks "the Fed is making a mistake".

Trump has repeatedly touted Wall Street records as proof of the success of his economic program, including his confrontational trade strategy. But he downplayed the first major drop in months, saying it was a "correction that we've been waiting for". "But I really disagree with what the Fed is doing, OK?"

She said in addition to rising interest rates, investors also fear that company profit margins will be squeezed by rising costs, including the price of oil.

Stock markets across the globe followed the sell-off in the US.

White House Press Secretary Sarah Huckabee Sanders said in a statement following the close of markets that the US economy is "incredibly strong" despite the sell-off. Berkshire Hathaway dipped 4.7 percent to $213.10 and reinsurer Everest Re slid 5.1 percent to $217.73.

"The selling is not panicking but it's persistent", analyst Patrick O'Hare said of the proceedings.

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Investors are leaning into safer stocks with steady dividends - utilities and consumer staples - and pulling out of the higher-paying, higher-risk stocks as other guideposts of growth, like the communication sector, tumbled.

Stocks are in the midst of a scary October slump, sliding sharply because investors are anxious about rising interest rates.

The Fed last raised interest rates in September and left intact its plans to steadily tighten monetary policy, as it forecast that the US economy would enjoy at least three more years of economic growth.

Last week's jump in yields followed strong USA data but many analysts have been anticipating dynamics in the bond market to change due to expectations that central banks in Europe and Japan will soon phase out bond-buying programmes.

"It's shifting the tectonic plates", said Jack Ablin, chief investment officer at Cresset Wealth Advisors.

'As stocks go up, tech goes up more than the stock market.

Just a day earlier, Trump said he did not like the Fed's path on monetary policy, criticizing the central bank for moving too quickly with interest rate increases. The S&P 500 lost 94 points, or 3.3 percent, to 2,785. The benchmark 10-year Treasury yield surged to a seven-year high on Tuesday and the 30-year bond yield jumped to its highest since 2014.

Markets have been shaken by a row between Brussels and Rome, which are at loggerheads after Italy's populist government passed a purse-busting budget last week to the annoyance of the EU. In Paris, shares in Kering fell almost 10 percent, LVMH over seven percent and Hermes around five percent.

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