Asia’s Equities Fall as the US Federal Reserve Indicates Additional Rate Rises are Anticipated

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After the Federal Reserve of the United States contributed to existing worries of a recession by stating that it was not done hiking the country’s interest rates to calm inflation, the stock markets of Asia saw a sharp decline.

After the Federal Reserve hiked its key rate to the highest level in 15 years, the benchmark for Hong Kong’s market fell by 3.1 percent on Thursday, while markets in Shanghai, Seoul, and Sydney all followed Wall Street’s lead and fell.

While oil prices went down, the dollar value of the euro remained below 99 cents.

After the Federal Reserve hiked its short-term lending rate by 0.75 percentage points, which is three times its average margin, for the fourth time this year, the S&P 500 index, which is considered to be the benchmark for Wall Street, dropped by 2.5 percent.

By declaring “we have a ways to go,” Fed Chair Jerome Powell reaffirmed market participants’ expectations for more rate rises. He said that the idea of suspending the process was “very premature.”

According to James Knightley, Padhraic Garvey, and Chris Turner of ING, who authored a study on the organization’s findings, “Recession risks are growing, but that is the price the Fed is willing to pay to keep inflation under control.”

The Hang Seng in Hong Kong lost 488 points, bringing its total to 15,338.85, while the S&P-ASX 200 in Sydney down 1.9 percent, bringing its total to 6,855.40.

The Shanghai Composite Index ended the day at 2,997.46, down 0.2 percent from its previous close. The marketplaces in Japan were closed because of a holiday.

The Kospi in Seoul had a drop of 0.6 percent, landing at 2,322.11. The markets in New Zealand and Southeast Asia also declined as well.

This year, the Federal Reserve along with central banks in Europe and Asia have rapidly hiked interest rates in an effort to curb inflation, which has reached multi-decade highs. Investors are concerned it might push the economy of the whole world into a recession.

In September, consumer prices in the United States increased at the same 6.2 percent annual rate as they did in the previous month. Core inflation, which gives a better view of the trend since it excludes volatile food and energy costs, increased to 5.1 percent from 4.9 percent in August. This is an acceleration from the previous month’s reading.

The Federal Reserve indicated on Wednesday that it may turn to a more gradual pace of rate rises and that it would assess the impact of rate hikes on the broader economy.

The S&P 500 index dropped to 3,759.69 points on Wall Street. At 32,147.76, the Dow Jones Industrial Average was down 1.5 percent from its previous level. The Nasdaq composite index dropped by 3.4 percent, reaching a new low of 10,524.80.

The highest losses were seen in the stock prices of technology businesses, retailers, and healthcare providers.

Apple Inc., Amazon.com Inc., and Johnson & Johnson Inc. each saw their share prices decline by 3.7 percent, 4.8 percent, and 1.5 percent, respectively.

Investors are holding out hope that Fed policymakers may be persuaded to soften their plans to raise interest rates in response to signals that house sales and other activities are slowing. However, the most recent numbers, particularly with regard to hiring, are pretty good, which is a warning that the Fed may maintain its aggressive stance.

Thursday, the United States government is expected to provide statistics on the unemployment rate, and Friday, a report will be released on the overall state of the labor market.

In the oil sector, the price of a barrel of US benchmark crude fell by 43 cents to $89.57 a barrel during electronic trading on the New York Mercantile Exchange. On Wednesday, the price of the contract increased by $1.63 to reach $90.

In London, the price of a barrel of Brent crude, which serves as the price benchmark for international oil transactions, decreased by 27 cents to $95.89. In the previous session, it increased by $1.51, reaching a price of $96.16 a barrel.

The value of one United States dollar rose to 147.33 Japanese yen from 146.94 yen on Wednesday. The value of the euro decreased from 98.83 cents to 98.26 cents.

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