Asian markets and US futures fall after Fed announced March rate hike


Investors fear that higher rates in the United States will push capital out of emerging markets in Asia and cause the region’s currency to depreciate, causing financial turmoil.

from Japan Nikkei (N225) slipped 3.3% in afternoon trade, compounding earlier losses.
from Korea Kospi (KOSPI) fell 3.2%. The index is on the verge of falling into a bear market and last traded more than 20% from a high last July.

Tech stocks fell sharply. An index in Hong Kong that tracks China’s biggest tech companies fell more than 4%. Alibaba lost more than 6%.

Software bank (SFTBF) and Tokyo Electron – a major Japanese semiconductor and electronics company – also fell 9% and 5%, respectively, in Tokyo.
On Wall Street, Dow (UNDUE) futures fell about 440 points. S&P500 (INX) and Nasdaq (COMP) fell by 1.5% and 1.9% respectively. All three indices closed slightly lower on Wednesday.
The declines come after Federal Reserve Chairman Jerome Powell signaled that the Fed is preparing to raise interest rates, even though the central bank has kept rates near zero for now.

“I would say the committee is of the view that the federal funds rate should be increased at the March meeting, assuming the conditions are appropriate to do so,” he told reporters on Wednesday.

In a statement, the Fed said it would be “shortly appropriate to raise the target range for the federal funds rate,” with inflation well above 2% and a strong labor market.

Expectations of a US rate hike pushed a key dollar index to the highest level in nearly a month. The U.S. dollar currency index — which measures the strength of the greenback against a basket of currencies used by U.S. trading partners — was up 0.7% to trade at 96.65.

Outside of external growth shocks, “there isn’t much that would stop the Fed from raising interest rates at its March meeting,” wrote Kerry Craig, global market strategist for JP Morgan Asset. Management, in a note Thursday. He added that a tightening of federal policy adding to market volatility over the course of the year.”

Xi Jinping urges West not to 'tighten the brakes' by raising interest rates too quickly

The International Monetary Fund recently warned that emerging and developing economies should brace for possible financial market turmoil as the United States and Europe raise policy rates.

“Higher yields elsewhere will encourage capital to flow abroad, putting downward pressure on currencies in emerging markets and developing economies and increasing inflation,” the organization said in its report on Tuesday. the global economic outlook.
And Chinese President Xi Jinping last week urged Western central banks not to raise interest rates too quickly to fight inflation, as his country goes the other way to fight a sharp economic slowdown.

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