FED Sends Markets To One Month Low

World shares sank to their lowest level in more than a month after disappointing sessions in New York yesterday, along with disappointment when trading started in Asia on Tuesday morning. The sell off continued in Europe, and emerging markets saw funds pouring out. Global markets are worried and at unease with expected cuts in US Stimulus and related gains in bond yields, leading to investors being on edge. Oil and precious metal prices have fallen with the Dollar under pressure. EUR/USD stands at 1.3410. USD/JPY is at 97.50.

European stocks were down with the French CAC as the biggest loser at minus 1.35 %%.  The FTSE London-index dropped 0.57 %% while the German DAX was down 1.06 %%. The Russian indices suffered similar losses.  The losses in Europe are following a fourth day of straight falls on both Wall street and in Asia. India is also hit hard by a dramatic fall in the Rupee in relation to USD. The Japanese Nikkei fell 2.7 %%.

US Federal Reserve (FED) shall publish their minutes from the end of July meeting later on today.  It is expected that the minutes could offer hints on when FED will start winding down its USD 85 billion-a-month bond buying program. Uncertainty regarding what is going to happen next has recently driven up bond market borrowing costs.  This has sparked a sell off in riskier assets as stocks.

Brent crude, which has been steady above USD 110 a barrel, fell below this level on Tuesday due to nervousness about the effect of a halt in monetary easing. Oil prices are, however, supported by export problems in Libya and the continued unrest in Egypt. Western powers are threatening to withdraw their economic assistance, but Saudi Arabia stated yesterday that they would step in to avoid any collapse of the Egyptian economy.

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