Asian stock markets experienced mixed changes on Thursday after Wall Street declined following the Federal Reserve's decision to raise interest rates.
Interest Rate Hike and Its Impact on the Market
The quarter-point increase in interest rates brings the Federal Reserve's key rate to a target range of 3.75% to 4.00%, as the institution seeks to control inflation in the United States, which has consistently been above the set target.
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The Nikkei 225 index in Japan rose by 0.2% to 64,067.53, while South Korea's KOSPI increased by 0.9% to 6,678.49. In contrast, Hong Kong's Hang Seng index fell by 0.7% to 24,533.46, and the Shanghai Composite index decreased by 0.4% to 3,877.46. In Australia, the S&P/ASX 200 reached 8,718.20, up by 0.3%.
Market Reaction Analysis
On Wednesday, the S&P 500 on Wall Street fell by 0.5%, while the Dow Jones Industrial Average dropped by 1.2%, and the tech-heavy Nasdaq remained mostly unchanged. Market reactions were generally expected, as the interest rate hike aligned with market expectations. However, the ongoing war in Iran is likely to put further pressure on inflation.
After the Federal Reserve's announcement, the yield on the two-year U.S. Treasury rose to 4.72%, compared to about 4.67% on Tuesday. The yield on the ten-year Treasury remained above 5.00%.
Government bond yields have remained higher since the onset of the war, as the energy shock from the conflict adds to inflationary pressure, and investors are also concerned about the rising national debt of the United States.
The U.S. dollar fell to 156.04 Japanese yen on Thursday, while the euro was trading at 1.1467 dollars, showing an increase from 1.1465 dollars.
Oil prices rose slightly as oil flows in the Strait of Hormuz, a crucial waterway for global oil transport, remained limited, and the closure of a key oil pipeline by Saudi Arabia added pressure on oil supply.
Brent crude, the international benchmark, traded at $105.89, up by 0.1% at the start of Thursday.
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Source: abcnews.com
