Traders work at their desks in front of the DAX board at the Frankfurt Stock Exchange yesterday. The DAX 30 plunged 3.06% to 9,916.16 points at close.

AFP/London

The US Federal Reserve’s decision to hold interest rates steady exposed a gulf in global stocks yesterday, with European shares slumping and emerging markets jumping.
At the close of trading yesterday, London’s FTSE 100 index dropped 1.34% compared with Thursday’s close to 6,104.11 points.
In the eurozone, Frankfurt’s DAX 30 plunged 3.06% to 9,916.16 points and the CAC 40 in Paris sank 2.56% to 4,535.85.
Standard Chartered fell 2.48% to close at 722.70 pence, RBS sank 2.18% to 318.90 pence, Barclays dropped 2.76% to 253.25 pence, and HSBC reversed 2.36% to 490.65 pence.
Miners Anglo American fell 2.09% to 720 pence, Antofagasta dropped 1.70% to 579.50 pence, Rio Tinto slumped 1.79% to 2,299.50, and BHP Billiton gave up 0.86% to 1,098.
The Fed decision hurt the dollar against the yen sliding to ¥119.94 in European trading, compared with 120.90 yen in Asia Thursday.
However the euro slid to $1.1365 from $1.1436 a day earlier, after Benoit Coeure, a member of the European Central Bank’s executive board, vowed the ECB would “protect the eurozone from external financial shocks”.
The rate of return on eurozone bonds had already been falling as investors anticipated the Fed’s decision might prompt the ECB to step up its QE stimulus programme of bond purchases.
However stocks in Europe fell as investors saw the Fed inaction as confirmation of the global economic outlook.
“The Federal Reserve’s fear over a global growth slowdown cast a shadow across the whole of the FTSE 100,” said analyst Jasper Lawler at CMC Markets UK.
Wall Street stocks slid further after most having already fallen Thursday in the wake of the Fed’s announcement.
Near mid-day yesterday, the Dow Jones Industrial Average was down 0.97%, the S&P 500 0.64% and the tech-rich Nasdaq Composite Index 0.34%.
The Fed’s decision followed widespread warnings about the dire impact a rate increase could have, with the World Bank predicting this week it would cause a “perfect storm” in financial markets.
It also came despite a string of data in recent months showing the US economy, the world’s biggest, is well on track to recovery.
Fed Chair Janet Yellen told a news conference: “A lot of our focus has been on risks around China, but not just China, emerging markets more generally and how they may spill over to the US. “We’ve seen significant outflows of capital from those countries, pressures on their exchange rates and concerns about their performance going forward,” Yellen said of the emerging market economies.