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FTSE 100 tumbles 1% as Federal Reserve chief fails to stem fears of interest rate rises

Jim Armitage
·1 min read
<p>Bond markets show rate rise fear</p>

Bond markets show rate rise fear

The FTSE 100 tumbled more than 1% in early trading after Federal Reserve chief Jay Powell failed to calm market jitters over potential interest rate rises.

Powell, whose Fed has been struggling to contain rampant speculation in the bond markets that interest rates will have to rise to curb inflationary pressures, said yesterday his rate-setting team would be “patient” in tapering out support for the economy.

He repeated his point that the central bank would not act until unemployment came down in the US.

But that wasn’t enough to satisfy the bond markets, which saw Treasury bond yields - a proxy for wider interest rates - rise sharply again.

That in turn hit Asian stocks this morning and ripples into European trading too.

The FTSE 100 fell 70.9 points to 6579 in early trading.

The Hang Seng index in Hong Kong fell on Powell’s remarks before recovering to be broadly flat. The Nikkei in Japan fell around 0.5% and China’s CSI index ended flat after falling 2% at one point.

Beijing said it had set a target growth rate for the Chinese economy this year of “above 6%, with Premier Li Keqiang hailing the country’s recovery from the Covid economic crisis and pledging to create 11 million urban jobs.

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