The yen crossed the psychologically important 145.00 level versus the dollar to its lowest level since 1998
Wall Street stocks plunged on Wednesday as investors digested the Fed’s decision and the latest comments from Powell’s press conference. The Federal Reserve raised rates by 75 basis points and forecast more sizable rate hikes, spooking investors by its hawkish plan to hike rates to 4.4% by next year. The Dow Jones slid 1.7%, the S&P 500 shed 1.71%, and the Nasdaq Composite slumped 1.79%. Meanwhile, 2-year Treasury note surpassed 4.1% — the highest level since 2007, while benchmark 10-year note held above 3.5%, its highest level since 2011.
Asian equities followed US markets down on Thursday after the Federal Reserve delivered another big interest rate hike. The Kospi in Seoul gave up 0.63 after an early dip by more than 1.5%. Hong Kong’s Hang Seng tumbled 2.13% and China’s Shanghai Composite lost less than 0.3%. The Nikkei 225 in Tokyo slid 0.58% after the Bank of Japan on Thursday maintained its ultralow rate policy as widely expected. After the meeting, the yen crossed the psychologically important 145.00 level versus the dollar to its lowest level since 1998.
In Europe, stocks opened lower today as the regional indices closed before the FOMC meeting decision on Wednesday and thus avoided the late selling in the aftermath. US stock index futures stay on the defensive as well, looking set to extend the decline from yesterday as market participants still digest another big rate hike from the Fed. Now, the market focus shifts to the Bank of England that is expected to hike rates today.
In currency markets, the US dollar surged to fresh multi-year highs around 111.80 after a decisive break above the 111.00 handle for the first time in more than 20 years. The greenback derived strong support from a hawkish Fed while risk aversion added to the buying pressure surrounding the safe-haven US currency. EURUSD fell abruptly towards the 0.9800 mark and could see more losses in the near term despite oversold conditions.