The Federal Reserve (Fed) finally implemented an increase in interest rates yesterday, in line with market forecasts as Chairman Jerome Powell's follow-up comments left investors reeling.
The FOMC meeting early this morning saw interest rates raised by 75 basis points for 4 consecutive meetings, bringing the total amount of policy tightening to 4.00%.
At that time, the United States (US) equity seemed to be moving well but started to retreat after Powell voiced a hawkish tone about the prospect of interest rate hikes at the next meeting.
The Dow Jones Industrial Average fell 1.55% to 32,147.76 while the S&P 500 was down 2.50% to 3,759.69 and the Nasdaq Composite was down 3.36% to 10,524.80.
Commenting on market conditions yesterday was LPL Financial's global chief strategist, Quincy Krosby, who said conditions were positive during the FOMC and turned negative once Powell spoke.
Stephen Massocca from Wedbush Securities added that with a brief speech by Powell that gave the impression that the central bank was refusing to slow down the increase, it had dampened investor confidence.
In general, investors had previously expected the Fed to slow down interest rate hikes at the December meeting after yesterday's 75 basis point jump but that prospect was seen shattered by Powell's new statement.
Revealing the situation in Asia this morning, South Korea's Kospi fell 1.41%, Kosdaq fell 1.57%, Australia's S&P/ASX 200 fell 2.23% and the broader MSCI Asia Pacific index of shares outside Japan plunged 1%.
In the meantime, Treasury yields strengthened as well as the FOMC with the 10-year note rising at 4.084% while the 2-year yield surged 4.603%.
A summary of the currency shows that the dollar weakened for a while during the FOMC but jumped higher as soon as Powell opened his mouth.
