Markets not merry as stock losses extend into eighth day
LONDON (Reuters) – A gauge of stocks worldwide posted an eighth straight decline on Monday as investors ignored Trump administration attempts to reinforce confidence and the U.S. president called the Federal Reserve the “only problem our economy has.”
Investors, also facing the likelihood of a prolonged U.S. government shutdown, fled to the relative safety of bonds and gold during the first day of a week of trading shortened by the Christmas holiday.
Oil prices, meanwhile, tumbled more than 6 percent on Monday to the lowest in over a year.
On Sunday, President Donald Trump’s Treasury secretary responded to the ongoing selloff by calling top U.S. bankers and said he would convene a group of officials known as the “Plunge Protection Team.”
“There are a whole number of factors that have triggered this latest risk-off climate, including the Fed’s very modest deviation from its (rate increase) plan and the government shutdown in the United States,” said Investec economist Philip Shaw.
“We may get some clarity on several factors in early 2019, starting with a clearer line of sight on the prospect for a resolution in U.S.-China trade dispute, but until then, there are some nerves.”
MSCI’s world equity index .MIWD00000PUS, which tracks shares in 47 countries, was 1.57 percent lower and down 8 percent over the past eight sessions. The index touched its lowest since early 2017.
U.S. stocks have fallen sharply in recent weeks on concerns over slowing economic growth and efforts by the U.S. Federal Reserve to tighten monetary policy, with the S&P 500 index .SPX on pace for its biggest percentage decline in December since the Great Depression and on the cusp of confirming it is now in a bear market. The Nasdaq .IXIC has fallen nearly 22 percent from its Aug. 29 high.
Trump on Monday blasted the independent U.S. central bank, saying on Twitter that the “only problem our economy has is the Fed. They don’t have a feel for the market.”
Meanwhile, the U.S. Senate has been unable to break an impasse over Trump’s demand for funds for a wall on the border with Mexico, and a senior official said the resulting government shutdown could continue into January.