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Global stock markets came under renewed pressure on Thursday, with Wall Street dropping further as the threat of a US government shutdown this weekend compounded concern over the global economy and the risk that the Federal Reserve will go too far in raising interest rates.

The US President Donald Trump told lawmakers he would reject a bill to fund the government into next February, setting up a showdown over his ambition of winning $5 billion (€4.4 billion) to fund a wall on the border with Mexico. That led to a new leg down for equity markets still digesting the monetary policy update on Wednesday, which had disappointed investors hoping for a more dovish tone in response to global growth worries and market turmoil.

The US benchmark S&P 500 was down more than 2.6 percent at its worst, extending Wednesday’s heavy selling. The tech-heavy Nasdaq Composite index dipped into bear market territory — a fall of more than 20 percent from its August high — before a slight rebound, but it was still languishing more than 1.5 percent lower in mid-afternoon trading.

Crude oil prices also retreated, with Brent crude down more than 5 percent to $54.30 a barrel, the latest in a string of sell-offs that has left the international benchmark down 9 percent for the week to date.

In Dublin, the Iseq tracked European peers by dropping 1.2 percent, marking its lowest level since immediately after the UK’s Brexit referendum in June 2016. The pan-European Stoxx 600 index dropped 1.5 percent, after earlier hitting its lowest level since November 2016. Germany’s Dax shed 1.4 percent, France’s CAC 40 fell 1.8 percent, while in London, the FTSE 100 edged lower by a more modest 0.8 percent. Speaking at a press conference, Mr. Powell insisted that political considerations were playing “no role whatsoever” in the discussions and decisions on monetary policy. He said that policy no longer needed to be accommodative - or supportive of the economy and that there was now considerable uncertainty about the pace and destination of rate moves.

In its statement on Wednesday, highlighted market turbulence, saying it will “continue to monitor global economic and financial developments and assess their implications for the economic outlook”. It also tweaked the wording in its statement to show less conviction about the rates outlook. It has recently been saying it “expects that further gradual increases” in rates will be needed. Now the central bank “judges that some further gradual increases” are on the cards.

“As widely expected, the revised down its outlook for future rate increases and made other dovish changes to its message,” said Zach Pandl, Goldman Sachs economist. “But it was not dovish enough to support markets increasingly driven by concerns over slowing economic growth.”.

The new forecasts show a lower projection for the neutral rate than previously: the midpoint of its estimates now stands at 2.8 percent compared with 3 percent earlier. The key question in investors’ minds ahead of the latest policymaker meeting has been how close it is to a peak in its rate-rising cycle and whether it is teeing up a “pause” in tightening in March. Complicating the outlook is a broadening range of so-called downside risks confronting the US economy.