Asian Stocks Tumble as Fed Vows More Sharp Rate Hikes

By Ambar Warrick

Investing.com– Asian stock markets fell sharply on Thursday after the U.S. Federal Reserve hiked interest rates and vowed to tighten monetary policy aggressively to curb rampant inflation.

Technology-heavy indexes were the worst hit, tracking a similar overnight trend on Wall Street as investors discounted future earnings from the sector against a stronger dollar and elevated yields.

Hong Kong’s slumped 2.1%, while the shed 1.1%. South Korea’s also fell by nearly 1%.

The Federal Reserve for a third consecutive meeting on Wednesday, with Chairman Jerome Powell to combat inflation reaching a . The bank now sees its benchmark interest rate reaching 4.4% by end-2022, and rising even further in 2023.

Powell also signaled that the bank was willing to risk headwinds to economic growth and the labor market from rising interest rates, as it looks to rein in inflation.

The Fed’s tone was seen as far more hawkish than expected, indicating that pressure on financial markets from elevated yields is set to continue for at least the next year.

The shot up to an over 20-year high after the hike, while U.S. Treasury yields rose to new 11-year peaks.

also fell overnight, giving Asian stocks a weak lead-in. U.S. futures indicated that weakness in the stock market is likely to continue.

Further denting appetite for risk-driven assets, a potential escalation in the Russia-Ukraine conflict also weighed on overall market sentiment, after President Vladimir Putin called for a and threatened nuclear action.

Japan’s fell 0.6%, even as the Bank of Japan at ultra-low levels and maintained its dovish outlook. The world’s third-largest economy is facing elevated inflation due to a weakening yen and the rising cost of commodity imports.

were among the few outliers for the day, rising 0.2% ahead of a central bank meeting later today. is widely expected to maintain interest rates at a 20-month high.

Source link