World stocks down over fears of Fed stimulus cut

World stocks down over fears of Fed stimulus cut

KUALA LUMPUR, Malaysia (AP) — World stock markets were in the red Thursday after strong U.S. economic data renewed fears that the Federal Reserve may start cutting its monetary stimulus this month.

In Europe, most markets were muted ahead of European Central Bank and Bank of England policy meetings. The FTSE 100 index of leading British shares was flat at 6,509.39 while Germany’s DAX was also almost unchanged at 9,142.31. The CAC-40 in France shed 0.1 percent to 4,143.35.

Futures pointed to lackluster trading on Wall Street, with Dow and S&P 500 futures little changed.

A run of stronger economic reports has sparked anxiety that the Fed may decide to begin tapering off its $85 billion of monthly asset purchases at a Dec. 17-18 policy meeting.

A private payrolls report Wednesday from ADP said that U.S. businesses did the most hiring in a year in November, adding 215,000 jobs. October’s increase was also revised up to 184,000. The official data will be released Friday.

Stan Shamu, market strategist with IG in Melbourne, Australia, said new home sales were also very strong, up 25 percent in October and the highest monthly percentage gain since 1980.

“This ADP print certainly raises upside risk to Friday’s November payrolls which are expected to come in at 184,000. A non-farm payrolls print around 200,000 is what many analysts feel is needed to reinforce the December taper argument,” he said.

Since the stimulus has helped shore up stock markets for several years, its potential withdrawal has raised roiled investors, even if it is predicated on an improving economic outlook.

Fed up? US expected to cut cash stimulus

Fed up? US expected to cut cash stimulus

The main question ahead of the key Fed meeting on Tuesday is whether the world’s largest economy can survive on less government monetary stimulus. Data shows the economy is still luke-warm but politics will encourage the Fed to slow quantitative easing.

               

Chair Ben Bernanke gave strong hints in August that the Fed would decide to   begin tapering its stimulus in September. If he reneges it could   destabilize markets and jar investors. 

A final decision will be reached on September 18 at the   conclusion of the two-day meeting of Federal Open Market   Committee (FOMC).