Shares in Asia Fall following Latest US Fed Rate Hikes

Asia’s stock markets tumbled on Thursday after the US Federal Reserve hiked interest rates and hinted more raises are on the way. The announcement prompted wild swings in the stock market and a dramatic drop in the closing price for US stocks.

As of 9.37 a.m. Thai time, the Hang Seng index in Hong Kong fell 1.76%, the Shanghai Composite in mainland China shed 0.15%.

South Korea’s Kospi dropped 1.42%.

The Nikkei 225 in Japan slipped 1.03%. With its meeting wrapping up on Thursday, the Bank of Japan is likely to keep interest rates at ultra lows and retain its yield curve management policy in place.

Australia’s market was closed for a holiday.

The US Fed on Wednesday raised its benchmark interest rates by another 75 basis points and signaled that the central bank will keep raising rates well above the current level to bring down 40-year high inflation.

Fed’s Chairman Jerome Powell said that his main message has not changed since Jackson Hole, and that is the central bank is strongly resolved to bring inflation down to 2%, and will keep at it until the job is done.

Analysts are now seeing a terminal rate of 4.50-4.75% by next year with another 75bp hike in November, followed by a 50 bp in December and another 25bp hike in February.

Overnight in the US, the Dow Jones Industrial Average dropped 522.45 points, or 1.7%, to close at 30,183.78. The S&P 500 fell 1.71% to 3,789.93, and the Nasdaq Composite was 1.79% lower to end Wednesday’s trading at 11,220.19.