Trump takes aim at 'crazy' Fed as markets sink following U.S. slump

President Trump speaks to reporters while departing for travel to Iowa from the White House in Washington

President Trump speaks to reporters while departing for travel to Iowa from the White House in Washington

Asian markets plunged Thursday morning following the worst session on Wall Street for months, as US President Donald Trump said the Federal Reserve had "gone crazy" with plans for higher interest rates.

"I think the Fed is making a mistake. They're so tight. I think Fed has gone insane", president Trump replied. A stock market correction is defined as a decline of at least 10 percent from the high point of the past 52 weeks, suggesting that major US indices have further to fall.

Trump has publicly stated his concerns before, but on Tuesday said he had not discussed them personally with Federal Reserve Chair Jerome Powell, explaining that "I like to stay uninvolved".

Last week's jump in yields followed strong U.S. data but many analysts have been anticipating dynamics in the bond market to change due to expectations that central banks in Europe and Japan will soon phase out bond-buying programmes.

But one unintended outcome is that raising interest rates can scare off investors and precipitate a sell off in equities.

Money Map Press chief strategist Keith Fitz-Gerald, Fox Business correspondent Kristina Partsinevelos and Capital Wave forecast editor Shah Gilani discuss President Trump's criticism of the Federal Reserve.

He said the rising appeal of bond investments would be a challenge for stocks in the foreseeable future as capital moves out of riskier equities. An additional 1.5-percentage-point fall would confirm a correction for that index. Many observers expected that would trigger a sell-off in the stock market as investors flooded their cash into Treasurys.

In fact it is his policies that are behind the changes: tax cuts and spending policies are expected to juice the economy, adding to the Fed's justification to raise interest rates, while trade conflicts raise costs for companies, which could hit the bottom line in quarterly earnings - something analysts said helped prompt Wednesday's sell-off.

One reason why the Fed has been raising interest rates even with little sign of an inflation breakout is because the unemployment rate, which fell to 3.7 percent in September, is at a level that many officials expect will cause wage and price gains to accelerate over time.

Currency investors took shelter in the safe-haven yen, resulting in steep losses for Japanese exporters, with electronics giant Sony down almost five percent as blue-chip firms flashed red across the trading board. Berkshire Hathaway dipped 4.7 percent to $213.10 and reinsurer Everest Re slid 5.1 percent to $217.73.

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