Stocks down as divided Fed disappoints

The dollar stirred and equities recoiled on Thursday after a divided U.S. Federal Reserve dented stimulus hopes, TikTok’s tug-of-war clobbered tech stocks and dire European car sales underscored coronavirus troubles.

Traders were also watching Bank of Japan and Bank of England meetings as well as plenty more too, but the tone was set by the events overnight at the Fed and in the tech war. The Fed extended its ‘dot plot’ forecast of unchanged U.S. interest rates out to end-2023, but going no further than that, and upgrading growth forecasts so that GDP is now seen reaching pre-pandemic levels next year rather than in 2022.

Tech stocks shed 1.6% after U.S. President Donald Trump’s had warned China’s Byte Dance should not keep control of the U.S. operations of social media platform TikTok, a move that had also seen Chinese heavyweight Alibaba drop more than 4% overnight.

Banks, automakers and miners were the biggest sectoral fallers though, all dropping as much as 2%. Volkswagen, Renault and PSA Group fell between 2.5% and 3% after industry data showed European car sales fell by 17.6% in August.

The stronger dollar inflicted some damage in emerging markets too. Turkey’s battered lira hit its latest record low, Argentina announced new capital controls and there was a third straight day of falls for eastern European currencies.

MSCI’s broadest index of Asia-Pacific shares outside Japan had lost 1% overnight after five straight days of gains while Japan’s Nikkei shed 0.6%.

The Fed said it would keep interest rates near zero until inflation is on track to “moderately exceed” the central bank’s 2% inflation target “for some time.” New economic projections released with the policy statement showed most policymakers see interest rates on hold through to at least 2023, with inflation not breaching 2% over that period.

Brent crude dropped 1% to $41.80 per barrel while U.S. crude fell 1.2% to $39.68 per barrel. Gold also slipped 0.8% to $1,943.8 per ounce.