Asia-Pacific markets fell as the U.S. Federal Reserve hiked its benchmark interest rate by 50 basis points to its highest level in 15 years.
U.S. Treasury yields remained low, and the yield curve remained significantly inverted, as traders worried that tighter policy would precipitate a recession. The U.S. dollar was trading near a six-month low against major currencies.
The Hang Seng index dropped 1.4%. The Shenzhen Component climbed modestly, while the Shanghai Composite lost 0.32%, as official data indicated retail sales fell significantly more than predicted, while industrial production fell short. According to reports, China's annual Central Economic Work Conference would be held behind closed doors for two days till Friday.
South Korea's Kospi plummeted 0.92%, Australia's market benchmark sank 0.4%, and Japan's Nikkei dipped 0.17%. After reaching a high of 160.37 in the previous session for the first time since late August, MSCI's broadest index of Asia-Pacific shares fell 0.91%.
The U.S. S&P 500 fell overnight by 0.61%, although e-Mini futures predicted a tiny rebound of 0.06 percent for Thursday's reopening.
Fed Chair Jerome Powell stated on Wednesday that the central bank will raise interest rates more aggressively next year, even as the economy approaches a probable recession, claiming that a bigger price will be paid if the US central bank does not tighten its grip on inflation.
The remarks came after the Fed raised the benchmark rate by half a percentage point, as predicted (down from prior 75 basis point hikes), but projected a terminal rate above 5%, a level not seen since a severe economic slump in 2007.
In Tokyo trading, the 10-year Treasury yield fell back below 3.5%, while the two-year yield fell below 4.24%.
The margin between them widened slightly as well, reaching a negative 74.3 basis point. In the past, an inverted yield curve was a solid predictor of recessions.
The dollar index, which compares the U.S. currency to six other currencies, including the euro and pound, remained close to the overnight low of 103.44, a level not seen since June 16. It was last 0.09% higher at 103.75.
The euro fell 0.15% to $1.0664, but it remains close to Wednesday's six-month high of $1.0695.
Sterling fell 0.19% to $1.2405, keeping close to an overnight high of $1.2446, also the highest in over six months.
