Stocks plunge as investors fear interest rate hike

“While the hope is that the weekend will act like a circuit-breaker, the concern is that given the uncertainty over the economy, interest rates, trade, high multiples and the U.S. elections, some profit taking may seem appealing”. German exports fell sharply in July, shrinking the overall trade surplus for the fourth consecutive month – something not seen since 1992. In Asia, concerns over North Korea’s latest nuclear test hit stocks in South Korea.

The euro fell 0.3 percent against the dollar to $1.1224, pressured lower by a report on German exports that showed the steepest drop in almost a year.

GBP/USD is supported in the range of 1.3200 now trading at 1.3273 levels.

“While the pound has recently firmed from its post Brexit vote lows, it is still at an extremely competitive level and is likely to remain so for an extended period”.

US stocks were broadly lower in afternoon trading Friday, pulled down by steep declines in utilities and consumer-focused companies. Restoration Hardware gained $2.51, or 7.1 percent, to $37.80. It has made session high at 1.3051 and lows at 1.2996 levels. Crude oil futures gave up some of its spectacular gains from Thursday, but were still in a position to close higher for the week. Enterprise was down 19 cents, or less than 1 percent, at $27.06. Benchmark U.S. crude fell $1.74, or 3.7 percent, to close at $45.88 a barrel. It was still set for its first weekly gain in three weeks, though, after Russian Federation and Saudi Arabia agreed to work together to help rebalance the markets and after a surprisingly large drawdown in USA crude stocks. “It’s happening as economic data lately is coming in more softly than people would like”.

The Fed’s benchmark interest rate helps determine the cost of borrowing money throughout the economy, from the rate on a mortgage to the price tag for building a factory. Boston Fed President Eric Rosengren said in a speech Friday that “gradual tightening is likely to be appropriate”, but did not say if he supported a rate hike during the Fed’s September policy meeting. Several Fed officials have said in recent weeks that this is on the cards, although investors have yet to be fully persuaded.

Investor jitters over the possibility the Federal Reserve is ready to raise interest rates this year roiled Wall Street Friday, handing the stock market its worst day in more than two months.

The major stock-market averages are making their largest intra-day moves in months.

Higher U.S. rates and bond yields tend to make emerging market assets relatively less attractive and push up the dollar, inflating the amount of dollar-denominated debt held by emerging market borrowers.

So what’s next? According to history, “after going 50 days without a 1%+ decline, the S&P 500 slipped an average 1.5% in the following 20 trading days and fell in price two out of every three times”, Stovall wrote.

Seoul’s KOSPI index fell nearly 1.3 percent, while Sydney and Singapore each lost 0.9 percent.