Global stock markets plunge on fears over growth, interest rates
Business
Global stock markets plunge on fears over growth, interest rates
A fierce selloff gripped world markets Thursday as bank shares dragged Wall Street lower amid concerns the slowing global economy will continue to pressure down interest rates. The S&P 500 touched its lowest point in two years before bouncing back on a boost to energy shares. Financial shares, however, remained near their session lows and were on track to post their largest daily loss in five months.
There’s great fear coming out of the banks.
Jim Paulsen, chief investment officer at Wells Capital Management in Minneapolis
The rout in bank stocks comes as investors fear that the negative interest rates that a growing band of central banks have employed to spur economic growth are now part of the problem rather than the solution. In her second day of testimony before Congress, Federal Reserve boss Janet Yellen said the U.S. had no plans to move toward negative interest rates even though inflation remains weak and far below its 2 percent target. Yellen expressed “surprise” at how far European central banks had gone into negative territory.
Negative interest rates have become a real sore point because of the way they impair bank’s ability to do business.
CMC Markets U.K. analyst Jasper Lawler