Global stocks follow Wall Street lower after Fed rate cut

A currency trader talks on the phone near the screens showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won at the foreign exchange dealing room in Seoul, South Korea, Thursday, June 13, 2019. Asian stocks were mixed on Thursday as protesters in Hong Kong vowed to keep opposing a proposed extradition bill they fear would whittle down the territory’s legal autonomy. (AP Photo/Lee Jin-man)

BEIJING (AP) — Global stock markets followed Wall Street lower Thursday after the U.S. central bank cut its key interest rate but left investors uncertain about future reductions.

Benchmarks in London, Frankfurt, Shanghai and Hong Kong all tumbled.

In early trading, London’s FTSE 100 fell 0.1% to 7581.69 and Frankfurt’s DAX lost 0.3% to 12,158.74. France’s CAC-40 edged up 0.2% to 5527.91.

The Federal Reserve’s quarter-point cut, its first in a decade, was widely expected. But Chairman Jerome Powell disappointed investors by saying the central bank had no plans for a long cycle of lowering rates. He called Wednesday’s cut a “midcycle adjustment.”

Powell was “less dovish than expected,” said Jingyi Pan of IG in a report. Pan said market declines reflect “significant disappointment” that the Fed wasn’t “embarking on the beginning of a rate cut cycle.”

The CME Fedwatch Tool, operated by CME Group Inc., said investors expect only one more U.S. rate cut of one-quarter point this year, down from previous expectations of two.

Powell’s comments “suggested that the Fed is largely undetermined in their next steps,” said Pan.

In Asia, the Shanghai Composite Exchange lost 0.8% to 2,908.77 and Hong Kong’s Hang Seng shed 0.8% to 27,565.70. Tokyo’s Nikkei 225 edged up 0.1% to 21,540.99.

Sydney’s S&P-ASX 200 lost 0.4% to 6,788.90 and India’s Sensex declined 1.4% to 36,956.98.

South Korea’s Kospi gained 0.1% to 2,017.34. Benchmarks in New Zealand and Taiwan retreated and those Southeast Asia were mixed.

On Wall Street, the future for the Standard & Poor’s 500 index fell 0.1% and that for the Dow Jones Average was little-changed.

On Wednesday, the S&P 500 had its worst day in two months, falling 1.1% to 2,980.38. The index had hit an all-time high on Friday.

The Dow lost 1.2% to 26,864.27. The Nasdaq composite fell 1.2% to 8,175.42.

The Fed hopes the rate cut will counter threats to the U.S. economy ranging from uncertainties caused by the nation’s trade disputes to chronically low inflation and a dimming global growth outlook.

Fed officials had signaled their readiness to take action to help shore up U.S. growth, which faces threats from a tariff war with China.

Wednesday’s cut was the first since December 2008 during the global financial crisis, when the Fed slashed its rate to a record low near zero and kept it there until 2015. After that, the Fed went on to make nine quarter-point rate increases from December 2015 to December 2018.

The 10-year Treasury yield fell to 2.01% from 2.06% late Tuesday, a big move. The two-year yield, which is more influenced by the Fed’s movements, rose sharply to 1.86% from 1.83%.

SOUTH KOREAN TRADE: South Korean exports fell for an eighth month in July, declining 11% from a year earlier. The trade ministry blamed disruption due to global trade disputes, including between China and the United States. It said falling prices for memory chips hurt Korean producers. Exports to China plunged 16.4%, while sales to the United States were down 0.7%.

INDIAN MANUFACTURING: A gauge of Indian factory activity improved in July. The monthly purchasing managers’ index rose to 52.5 from June’s 52.1 on a 100-point scale on which numbers above 50 indicate activity expanding. Indian manufacturing has been in positive territory for two years. The improvement still should allow India’s central bank to cut interest rates at next week’s meeting of its leadership, said Darren Aw of Capital Economics in a report.

ENERGY: Benchmark U.S. crude fell 81 cents to $57.77 in electronic trading on the New York Mercantile Exchange. The contract gained 53 cents on Wednesday to close at $58.58. Brent crude, used to price international oils, lost 78 cents to $64.27 per barrel in London. It rose 42 cents the previous session to $65.05.

CURRENCY: The dollar gained to 109.09 yen from Wednesday’s 108.78 yen. The euro declined to $1.1050 from $1.1077.