The Dow Jones Industrial Average sunk just over 299 points on Tuesday after Federal Reserve Chair Jerome Powell hinted that the Fed could raise interest rates more than three times in 2018. JP Morgan has predicted four U.S. rate hikes in 2018 and another four in 2019. The first rate hike could be as early as next month. The S&P 500 also fell after Powell’s announcement, plummeting 1.27 percent, weighed down by real estate, telecommunications and consumer discretionary indexes. The NASDAQ ended the day down 1.23 percent, pressured by the mighty FAANG stocks.
Asian stocks followed the downtrend on Wednesday, pressured not only by the U.S. selloff but by weak factory data from China that sparked concerns about the global economic growth rate. Japan’s Nikkei 225 was down 1.17 percent as of 2:17 p.m. HK/SIN and Hong Kong’s Hang Seng Index was down 1.27 percent. Indexes throughout Asia remained in the red, with the Kospi down 0.96 percent and the Shanghai Composite down 0.44 percent. Australia’s ASX 200 was also down.
Reports out on Wednesday showed that China’s manufacturing in February posted the weakest numbers in more than a year and a half, largely due to the Lunar New Year holiday which halted production for several days and stricter pollution laws which reduced factory output. China’s services sector which accounts for more than half of the country’s economy also slowed in February. Despite these negative readings, analysts are quick to remind traders that the negative picture in China may not be a sign of long term trouble; instead, it may be corrected in March when there are more days and no holiday shutdowns.