Core indexes across Asia are falling after the US central bank raised its key rate to its highest level in 15 years.
Asian stock markets tumbled after the US Federal Reserve ratcheted up recession worries by saying it hasn’t finished raising the country’s interest rates to curb inflation.
Hong Kong’s core index shed 3.1 percent on Thursday, while Shanghai, Seoul and Sydney also fell following Wall Street after the Fed raised its key rate to its highest level in 15 years.
Oil prices fell and the euro remained below 99 cents.
The Wall Street benchmark S&P 500 plunged 2.5 percent after the Fed raised its short-term lending rate by 0.75 percentage points for the fourth time this year, three times its usual margin.
Fed Chairman Jerome Powell reaffirmed expectations of further rate hikes, saying “we have room to go.” He said it would be “very premature” to consider a pause.
“Recession risks are rising, but that’s the price the Fed is willing to pay to bring inflation under control,” ING’s James Knightley, Padraic Garvey and ING’s Chris Turner said in a report.
The Hang Seng in Hong Kong lost 488 points to 15,338.85, while the Sydney S&P-ASX 200 fell 1.9% to 6,855.40.
The Shanghai Composite fell 0.2% to 2997.46. Japanese markets were closed for the holiday.
Kospi in Seoul fell 0.6% to 2322.11. Markets in New Zealand and Southeast Asia also fell.
The Fed and central banks in Europe and Asia have raised rates aggressively this year to halt inflation, which is at its highest in decades. Investors fear that this could lead to a recession in the global economy.
US consumer prices rose 6.2 percent year-over-year in September, in line with the previous month. But core inflation, which rules out food and energy price volatility to give a clearer picture of the trend, accelerated to 5.1 percent from 4.9 percent in August.
On Wednesday, the Fed said it could move to a more deliberate pace of rate hikes and consider the overall economic impact.
On Wall Street, the S&P 500 fell to 3759.69. The Dow Jones industrial index lost 1.5% to 32,147.76 points. The Nasdaq composite index fell 3.4% to 10,524.80.
Shares of technology companies, retailers and healthcare companies were some of the biggest declines.
Shares of Apple Inc. fell 3.7%, Amazon.com, Inc. – by 4.8%, and Johnson & Johnson, Inc. — by 1.5%.
Investors are hoping that signs of weakening home sales and other activity may prompt Fed officials to ease their rate hike plans. But recent data, especially on wages, is relatively strong, a sign that the Fed may remain aggressive.
The US government is due to release data on unemployment on Thursday and a report on the labor market as a whole on Friday.
In energy markets, US benchmark oil lost 43 cents to $89.57 in electronic trading on the New York Mercantile Exchange. The contract rose $1.63 to $90 on Wednesday.
Brent crude, the benchmark for international oil trading, fell 27 cents to $95.89 a barrel in London. In the previous session, it rose by $1.51 to $96.16 per barrel.
The US dollar rose to 147.33 Japanese yen from 146.94 yen on Wednesday. The euro fell to 98.26 cents from 98.83 cents.
Credit: www.aljazeera.com /