World stocks down on prospect of Fed stimulus cut

First Posted:

(AP) World stock markets mostly fell Wednesday as investors factored in the prospect of the Federal Reserve reducing its lavish monetary stimulus this month.

Bourses across Asia recorded losses. In early European trading, Britain’s FTSE 100 was nearly unchanged at 6,525.60. France’s CAC 40 was up 0.4 percent at 4,107.35. Germany’s DAX was little changed at 9,110.73.

Futures augured a lower open on Wall Street, with Dow Jones futures down 0.1 percent and S&P 500 futures off 0.2 percent.

After the U.S. reported stronger-than-expected employment figures last week, markets have become convinced the Fed would start to taper off its stimulus.

The central bank’s $85 billion of monthly bond purchases have kept U.S. interest rates low to encourage economic recovery but also sent a flood of money into stock markets worldwide in search of higher returns.

“Markets have started to factor in the prospect of Fed tapering at the December meeting,” said Daniel Martin of Capital Economics in Thailand. The Federal Reserve’s policy-making Federal Open Market Committee is scheduled to meet Dec. 17-18 in Washington.

Japan’s Nikkei 225 closed down 0.6 percent at 15,515.06. Hong Kong’s Hang Seng tumbled 1.7 percent to 23,338.24 and China’s Shanghai Composite shed 1.5 percent to 2,204.17. Australia’s S&P/ASX 200 dropped 0.8 percent to 5,104.20 and South Korea’s Kospi slid 0.8 percent to 1,977.97. Southeast Asian bourses also were down.

Benchmark U.S. crude for January delivery was down 12 cents to $98.38 in electronic trading on the New York Mercantile Exchange. The contract gained $1.17 to close at $98.51 on Tuesday.

In currencies, the euro dropped to $1.3743 from $1.3759 late Tuesday in New York. The dollar fell to 102.58 yen from 102.85 yen.