World equity markets continued a weeklong slide yesterday amid investor concerns after the US Federal Reserve indicated it was set on its interest rate-hiking path next year even amid signs global economic growth is stuttering.
The Fed's move yesterday to largely adhere to its plan for additional rate hikes over the next two years raised worries for market participants from Asia to Europe, as major indexes fell to their lowest in two years and investors flocked to the safety of government debt.
European shares fell 0.9 per cent, with benchmark indexes in Germany, Britain and France all hitting their lowest since late 2016. Indexes in Japan and South Korea fell into a bear market, defined as a 20 per cent decline from recent highs, joining benchmark indexes in Shanghai and Hong Kong.
MSCI's global equity index fell to its lowest since May 2017, shedding nearly 0.8 per cent as it headed for a fifth straight day of losses.
On Wall Street, the Dow Jones Industrial Average fell 139.99 points, or 0.6 per cent, to 23,183.67, the S&P 500 lost 8.49 points, or 0.34 per cent, to 2,498.47 and the Nasdaq Composite dropped 6.73 points, or 0.1 per cent, to 6,630.09.
The Fed on Wednesday stuck by a plan to keep withdrawing support from an economy it considers robust, and hiked key overnight lending rates as expected by 0.25 per cent point.
It said "some further gradual" rate hikes would be needed in the year ahead, with policymakers projecting two rises on average next year instead of the three predicted in September.
Although largely in line with expectations, that tweak did little to soothe investor concerns over slowing world growth, US trade tensions with China, and tightening monetary conditions for companies in the world's biggest economy.
The equity losses added to the worst year for world stocks since the 2008 global financial crisis, with MSCI's 47-country world stocks index down 10 per cent. Nearly $7 trillion has been wiped off global stock markets this year, with emerging markets trampled flat by a charging dollar.
The angst in equity markets pushed investors towards the safety of government bonds.
German 10-year government bond yields, the euro zone benchmark, fell to their lowest in nearly seven months. Other high grade euro zone bond yields also fell.
Benchmark 10-year US notes last rose 3/32 in price to yield 2.7654 per cent, from 2.776 per cent late on Wednesday.
Oil prices, meanwhile, slumped as worries about oversupply and worldwide demand for energy pushed prices back towards their lowest levels in over a year. US crude fell 2.5 per cent to $46.92 per barrel, while Brent fell 2.1 per cent to $56.04 per barrel.
The dollar index fell 0.55 per cent, with the euro up 0.54 per cent to $1.1436.