JPMorgan Sees Cautious Tone in Asian Markets after Fed’s Rate Hike

JPMorgan sees Asia-Pacific markets to end the week on a cautious tone following the Federal Reserve’s 50 basis point interest rate hike on Wednesday.

“Given the U.S. market reaction after the FOMC meeting, we expect Asian markets to end the week with more cautious tone,” Tai Hui, the firm’s Asia-Pacific chief market strategist, wrote in a note.

Tai said that a weaker inflation print is required before the Fed’s hawkishness fades, while the region may be more optimistic about China’s projected reopening.

“The medium term prospects of China’s economic reopening and Asia’s domestic demand resilience could be a bright spot as the U.S. and Europe face more growth challenges,” Tai said. “We would need more weak inflation data in order for the Fed to tone down its hawkishness.”

Asian stock markets opened lower on Thursday after the U.S. Federal Reserve hiked its benchmark interest rate by 50 basis points to the highest level in 15 years, signaling that interest rates will rise faster than expected next year. The Hang Seng index in Hong Kong fell 1.8%, leading to losses in the region.