GLOBAL MARKETS DJIA 33966.35 -142.29 -0.42% Nasdaq 11170.89 -85.93 -0.76% S&P 500 3995.32 -24.33 -0.61% FTSE 100 7495.93 -6.96 -0.09% Nikkei Stock 28099.73 -56.48 -0.20% Hang Seng 19310.81 -362.64 -1.84% Kospi 2377.94 -21.31 -0.89% SGX Nifty* 18683.00 -67.0 -0.36% *Dec contract USD/JPY 135.48-49 +0.01% Range 135.62 135.24 EUR/USD 1.0660-63 -0.19% Range 1.0687 1.0655 CBOT Wheat Dec $7.282 per bushel Spot Gold $1,804.71/oz -0.1% Nymex Crude (NY) $77.46 $2.07 US STOCKS
U.S. stocks fell after the Federal Reserve raised interest rates, as expected, but also signaled rates may have to move even higher than previously thought to rein in inflation.
The S&P 500 fell 0.6% after trading higher during the early part of the day, while the tech-heavy Nasdaq Composite Index dropped 0.8%. The Dow Jones Industrial Average moved 0.4% lower.
Investors who had been hoping the Fed might be done raising rates relatively soon may have been left disappointed. Fed officials signaled they see interest rates rising to around 5.1% by the end of next year, up from previous estimates in September of around 4.6%.
Officials also said they see unemployment rising and economic growth being tepid in 2023.
"We're not out of the woods yet," said Viraj Patel, global macro strategist at Vanda Research. "We're still in a higher-than-normal inflation environment."
ASIAN STOCKS
Japanese stocks were lower in early trade, dragged by falls in electronics stocks, as concerns grow about the U.S. interest-rate outlook following the Fed's rate increase. Investors remain focused on economic data and their implications for monetary policy. The Nikkei Stock Average was down 0.4% at 28038.32.
South Korea's benchmark Kospi fell 0.5% to 2387.24 in early trade, dragged by internet and electronics stocks. Foreign investors led the retreat after the Fed raised the federal-funds rate by a half-percentage point as expected, but signaled plans to tighten policy more aggressively to fight inflation. USD/KRW was 0.5% higher at 1,302.50 which some analysts attribute to the Fed's hawkish stance.
Hong Kong's benchmark Hang Seng Index fell 0.4% to 19602.95 amid a downbeat outlook for Asian stocks. The negative lead from Wall Street has set the tone for the session in Asia, IG market strategist Jun Rong Yeap said in a morning report.
China stocks were mixed in early trade, following broad weakness in Asian equities after the Fed's latest interest rate decision. IG analyst Yeap Jun Rong said the U.S. central bank has "largely held firm on its hawkish stance," which is likely to "set the tone for a more downbeat session in Asia." Investors will now focus on China's key upcoming annual economic policy conference, and monitor officials' response to surging Covid-19 infections and their plans for an economic recovery, he reckoned. The benchmark Shanghai Composite shed 0.3% to 3166.91, the Shenzhen Composite was flat at 2047.76, while the ChiNext Price Index gained 0.3% to 2374.38.
FOREX
Risk aversion roared back after the Fed downshifted to a half-point rate hike pace but signaled ongoing increases will be appropriate to combat inflation, and that helped the dollar pare earlier losses, Edward Moya at Oanda said in a note. "The Fed's statement and projections was hawkish as the Federal funds rate was seen reaching 5.1%, which was a half-point higher than the September forecast," the senior market analyst, Americas, said. "The Fed did not welcome the disinflation trends that have just started to emerge and focused on robust job gains and elevated inflation. Any hopes of a soft landing disappeared as the Fed seems like they are committed to taking rates much higher." The WSJ Dollar Index was down 0.1%.
METALS
Gold prices edged down after the U.S. Federal Reserve signaled that it plans to continue raising interest rates next year, Oanda senior market analyst Edward Moya said in a note. Moya thinks the recent gains in the precious metal were mainly driven by hopes that the U.S. central bank could wrap up its rate increases in February next year, but this no longer seems to be the case after Wednesday's FOMC decision. Higher rates are typically viewed as negative for the commodity. Spot gold was down 0.1% at $1,804.71/oz.
OIL SUMMARY
Crude oil prices were a tad lower in early Asian trade, pulling back after rallying on Wednesday. The gains were driven by the International Energy Agency warning that prices could continue to rise next year, as sanctions on Russia might squeeze energy exports, Saxo market strategist Charu Chanana said in a note. IEA also increased its estimates for global oil demand by 300,000 barrels a day next year, in a likely nod to China's expected reopening, she added. Front-month WTI futures declined 0.5% to $76.81/bbl, while front-month Brent was down 0.5% at $82.23/bbl.
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(END) Dow Jones Newswires
12-14-22 2215ET
