S&P 500 plunges to August low on global growth concern

US stocks declined as the International Monetary Fund  (IMF)  cut it growth forecast  and  warned  of  “frothy”  equities  amid  signs  of  slowing  growth  in Europe.  The S&P 500 sank 1.5% to 1,935.09.  The Dow  Jones Industrial Average lost 272.52 points (1.6%) to 16,719.39.

IMF cuts global outlook as risk of ‘frothy’ stocks raised

The  IMF  cut  its  outlook  for  global  growth  in  2015  and  warned  about  the risks  of  rising  geopolitical  tensions  and  a  financial-market  correction  as stocks reach “frothy” levels.  The world economy will grow 3.8% next year, compared with a July forecast for 4%, after 3.3% growth in 2014, the IMF said.  The  US  is  a  bright  spot,  and  is  predicted  to  grow  2.2%  in  2014, compared with a 1.7% projection in July according to the IMF. In 2015, the US is seen expanding 3.1%, compared with a 3% pace forecast in July.

Dudley calls forecast for mid-2015 rate rise ‘reasonable’

Forecasts for the Federal Reserve to raise interest rates in mid-2015 are “reasonable”  as  policy  makers  wait  for  unemployment  to  fall  further  and inflation to rise, New York Fed President William C. Dudley said. There still is  a  significant  underutilization  of  labor  market  resources,”  he  said.  “The consensus  view  is  that  lift-off  will  take  place  around  the  middle  of  next year. That seems like a reasonable view to me,” Dudley said.

Consumer credit in US increases at slowest pace since November

Consumer borrowing in the US increased in August at the slowest pace in nine months as credit-card use declined.  The August’s US$13.5bn gain in credit  followed  a  US$21.6bn  advance  in  July  that  was  smaller  than previously estimated, a report from the Federal Reserve showed.

ECB stimulus raises risk of bubbles, Dutch central bank says

The  ECB’s  stimulus  to  revive  the  euro-area  economy  might  lead  to  the creation of new bubbles, Governing Council member Klaas Knot said. “The current accommodative monetary policy facilitates the creation of bubbles on  the  financial  markets”  and  is  a  challenge  for  the  ECB,  he  said.  Low inflation and a “fragile” economic recovery means it’s necessary for central banks to keep an accommodative monetary policy and that The ECB will continue to do that for the time being, he said.

German industrial output drops most since 2009 in August

German industrial production fell more than economists forecast in August in  the  latest  sign  that  the  outlook  for  Europe’s  largest  economy  is deteriorating.  Production,  adjusted  for  seasonal  swings,  dropped  4%  in August from 1.6% in July, the Economy Ministry said.

Banks Indonesia holds interest rate citing inflation risk

Indonesia’s  central  bank  held  its  key  interest  rate  at  7.5%,  keeping monetary  policy  tight  as  it  signaled  vigilance  against  inflation  risks  and anticipates an end to US monetary easing. Bank Indonesia Governor Agus Martowardojo and his board kept the reference rate unchanged for an 11th straight meeting, as predicted by economists surveyed by Bloomberg.

Brent oil falls as German output fans growth concern

Brent crude declined after disappointing German output reinforced concern that global oil demand will falter. Brent for November settlement declined as much as US$0.78 to US$92.01 a barrel.

Source: Bloomberg