Investors have finally decided what they think of the US Federal Reserve's latest stimulus package that has caused a backlash throughout the world: it stinks.The sell-off of everything from stocks to Treasury bonds and gold at the end of last week was a s
Investors have finally decided what they think of the US Federal Reserve’s latest stimulus package that has caused a backlash throughout the world: it stinks.
The sell-off of everything from stocks to Treasury bonds and gold at the end of last week was a sharp reversal of the trend leading up to the $US600 billion “quantitative easing” programme, known as QE2.
During this time almost all asset classes rose at the same time. Now investors are dumping trades that had generated months of healthy gains.
The Dow Jones Industrial Average fell 90.52 points on Friday to 11,192.58, down more than 2.2% for the week though still up 7.3% for the year-to-date.
Just a week ago, the blue-chip stock index was at its highest level since before the Lehman Brothers bankruptcy in 2008. The Dow has now given up all of its gains after the Fed's QE2 announcement on November 3.
The Nasdaq Composite fell 1.5% to 2518.21, a 2.4% drop for the week and ending a string of five consecutive weekly gains. The S&P 500 index fell 1.2% to 1199.21 on Friday, also breaking a five-week winning streak.
Other markets: Europe, Asia down
European and Asian markets fell after fresh worries over Chinese rate hikes sent shares tumbling in Shanghai, while bank stocks bounced back after European leaders sought to provide some reassurance to nervous sovereign debt holders.
The Stoxx Europe 600 index dropped 0.4% to settle at 270.18, with mining stocks leading the decline. The French CAC 40 index fell 0.9% to close at 3831.2, the UK's FTSE 100 settled 0.3% lower at 5796.87 and the German DAX 30 index gained 0.2% to finish at 6734.61..
The benchmark Shanghai Composite Index fell 5.2% to2985.43, erasing nearly a quarter of its three-month upswing. It was the measure's biggest drop in 14 months.
Hong Kong's Hang Seng Index gave up 1.9% to 24222.58, Japan's Nikkei Stock Average lost 1.4% to 9724.81 and Taiwan's Taiex shed 1.4% to 8316.05.
Commodities: Oil, gold down
Crude-oil prices fell $US2.93 a barrel, or 3%, to $US84.88 in Nymex trading, also the lowest since November 3.
Gold ended the week at its lowest since November 3. The most-actively traded December contract fell $US37.80, or 2.7%, to $US1365.50 an ounce.
Agricultural commodities such as cotton, sugar and soybeans also tumbled.
Currencies: Euro, pound up
The euro clawed its way back from a six-week low to advance on the dollar after Ireland issued multiple denials that it is on the verge of requesting an emergency European Union lifeline.
A statement from EU leaders also partially damped concerns that had flared up in the region's smoldering sovereign-debt crisis, enabling the common currency to rebound strongly after touching $US1.3575, the weakest point since late September.
At the weekend, the euro was at $US1.3693, compared with $1.3659 late on Thursday. The dollar moved to ¥82.44 from ¥82.50.
The euro was at ¥112.89 from ¥112.69. The UK pound moved to $US1.6136 from $US1.6130. The dollar ticked up to 0.9803 Swiss franc from 0.9770 franc.
