Asian stocks fall, dollar edges up on hawkish Fed: markets wrap
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Asian stocks followed US equities lower after the Federal Reserve signalled interest rates will climb higher than anticipated next year.
Benchmark indexes in China, Japan, South Korea and Australia slid on Thursday. Futures contracts for the S&P 500 fluctuated after the benchmark snapped a two-day rally on Wednesday in a volatile session that saw shares end off their lows.
Fed chair Jerome Powell said the central bank had “ways to go” in its campaign to rein in inflation. Policy makers projected rates would end next year at 5.1%, a higher level than previously indicated and well above market projections.
“The Fed was decidedly more bearish than expected,” said Karen Jorritsma, head of Australian equities at RBC Capital Markets. “They will stay the course on inflation, making a hard landing almost a certainty.”
Treasury yields made small gains in Asia after fluctuating during the US session after the Fed’s hawkish decision and Powell’s comments. The relatively muted moves indicate bond market doubts about the Fed’s staying power in raising and holding rates higher for longer.
The Federal Open Market Committee raised its benchmark rate by 50 basis points to a 4.25% to 4.5% target range. Powell left the door open to a similar hike at the next meeting in February or a step down, while pushing back on bets for reversing course next year.
Swaps traders expect policy makers to continue on the slower path.
China injected a net 150 billion yuan in liquidity through its medium-term lending facilities, more than economists anticipated, according to figures released on Thursday.
Later, policy decisions will be front and centre in Europe, with the Bank of England and European Central Bank seen following the Fed with half-point hikes in rates. BM/DM
Benchmark indexes in China, Japan, South Korea and Australia slid on Thursday. Futures contracts for the S&P 500 fluctuated after the benchmark snapped a two-day rally on Wednesday in a volatile session that saw shares end off their lows.
Fed chair Jerome Powell said the central bank had “ways to go” in its campaign to rein in inflation. Policy makers projected rates would end next year at 5.1%, a higher level than previously indicated and well above market projections.
“The Fed was decidedly more bearish than expected,” said Karen Jorritsma, head of Australian equities at RBC Capital Markets. “They will stay the course on inflation, making a hard landing almost a certainty.”
Treasury yields made small gains in Asia after fluctuating during the US session after the Fed’s hawkish decision and Powell’s comments. The relatively muted moves indicate bond market doubts about the Fed’s staying power in raising and holding rates higher for longer.
The Federal Open Market Committee raised its benchmark rate by 50 basis points to a 4.25% to 4.5% target range. Powell left the door open to a similar hike at the next meeting in February or a step down, while pushing back on bets for reversing course next year.
Swaps traders expect policy makers to continue on the slower path.
China injected a net 150 billion yuan in liquidity through its medium-term lending facilities, more than economists anticipated, according to figures released on Thursday.
Later, policy decisions will be front and centre in Europe, with the Bank of England and European Central Bank seen following the Fed with half-point hikes in rates. BM/DM