Global stock markets slump as Fed views higher rates

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Global stock markets slump as Fed views higher rates

NEW YORK, New York - As the U.S. economy picks up steam, fears are increasing that interest rates will be higher and will stay higher for longer.

The Fed Chairman Jerome Powell told the Senate Banking, Housing and Urban Affairs Committee Tuesday that the latest economic data was stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated. If the data showed that faster tightening is warranted, we would be prepared to increase the pace of rate hikes. The comment boosted the U.S. dollar on foreign exchange markets and caused widespread falls across the board on equity markets.

The Dow Jones industrials led the charge, falling 574.98 points or 1.72 percent to 32,856. The Standard and Poor's 500 dropped by 62.05 points or 1.53 percent to 3,986. The Nasdaq Composite fell by 145.41 points or 1.25 percent to 11,530. The U.S. dollar hammered other currencies, sending them into a tailspin. The euro fell to 1.0547 around the U.S. close Tuesday. The Canadian dollar was slightly lower at 1.3753, as was the Australian dollar at 0.6588, for a loss of 2.11 percent and the New Zealand dollar at 0.6110.

The British pound fell by 1.61 percent to 1.1824, while the Swiss franc fell to 0.9422.

It was a mixed day for the global stock markets on Tuesday, with some indices posting losses while others managed to gain ground.

The ESTX 50 PR.EUR and BEL 20 indices fell by 0.81 percent, 0.76 percent and 0.76 percent, respectively.

In London, the FTSE 100 closed at 7,919. 48, down by 0.13 percent, or 10.31 points, was down by 0.13 percent. The Dax in Frankfurt, Germany fell by 0.60 percent, or 94.05 points, to close at 15,559. Over in Asia, the Nikkei 225 in Tokyo bucked the trend, closing at 28,309. The percentage of 16 was up by 0.25 percent, or 71.38 points. The Hang Seng Index in Hong Kong fell by 0.33 percent, or 68.71 points, to close at 20,534. In mainland China, the Shanghai Composite Index closed at 3,285. The Shenzhen Index ended the day at 11,608. The 10, down by 1.11 percent, or 36.93 points, was down by 1.11 percent. 58 was down by a hefty 1.98 percent, or 234.30 points.

In Australia, the S&P ASX 200 closed at 7,364. 70, up by 0.49 percent, or 36.10 points, was up by 0.49 percent.

The Euronext 100, MOEX Russia, the Australian All Ordinaries, the FTSE Bursa Malaysia KLCI and the KOSPI Composite indices all saw gains of 0.77 percent, 0.19 percent, 0.69 percent, 0.41 percent and 0.03 percent respectively.

The Singapore Straits Times Index and New Zealand's S&P NZX 50 index closed with marginal gains of 0.18 percent and 0.06 percent. The STI Index rose by 5.96 points to close at 3,245. The S&P NZX 50 increased by 7.08 points to close at 11,919.