Markets slide as Fed judgment awaited

MARKETS around the globe fell yesterday in slim trading, as investors waited for today’s judgment on the US economy by Federal Reserve chairman Alan Greenspan.

As sentiment shifted to a belief that the Greenspan-led Fed will opt to leave interest rates unchanged, share prices fell on most bourses, with the FTSE down by 2.3%, but the index of Irish shares, the ISEQ, was up 0.22%, with small caps dropping marginally.

The US economy is unlikely to fall back into recession and lower interest rates are not needed to foster its recovery, according to a survey of business economists released yesterday. A survey of 193 economists by the National Association for Business Economics in the US found that 69% believe the odds of a so-called double-dip recession are under 50-50. In a March survey, 76% of the respondents viewed odds of a renewed recession as below even. A Fed cut in interest rates could be taken as a sign of weakness and loss of faith in the economy, leading to a wave of selling, which encouraged some investors to take profits yesterday on the small gains over the previous three days’ trading.