Equities Fell Sharply, Commodities Extended Rally amid Fed’s Hawkish Signal

Asian markets dipped sharply after selloff triggered by Federal Reserve’s Meeting Minutes showed hawkish roadmap ahead.

Equites in Mainland China, Hong Kong, South Korea, Japan and Thailand inched down roughly around 1.5%. The MSCI Asian Index ex Japan edged down by 1.45%.

In China, officials will use monetary policy tools at an “appropriate time” and consider other measures to boost consumption, according to the readout from a meeting of the State Council chaired by Premier Li Keqiang on Wednesday.

The Fed signaled that it is considering half-point rate increases and at the same time reduce its massive bond holding at a maximum pace of $95 billion a month to tighten financial conditions.

U.S. futures contracts S&P 500 edged higher while Nasdaq 100 rose about 0.4% after deepest two session drop nearly in a month.

U.S. 10-year declined three basis points to 2.57% while dollar extended rally underscoring the long run in almost 10 months.

Commodities market continued to rally amid supply disruptions sparked by Russia’s war in Ukraine. JPMorgan strategist point towards commodities climbing further 40%.

Meanwhile, Chinese companies snapping up Russian oil and coal paying in yuan.

Both Brent and WTI climbed after the International Energy Agency’s decision to deploy 60 million barrels from emergency stockpiles. The WTI is trading around $97 a barrel while Brent is trading around $102 a barrel.