Global stock markets fall after the Fed hints at tightening monetary policy

After the Fed hinted that it might tighten monetary policy earlier than expected, global stock markets and crude oil fell, and the U.S. Central Bank predicted that inflation would rise sharply this year.

On Thursday, Japan’s Topix Index fell 0.8%, and Australia’s S&P/ASX 200 Index fell 0.3% in early Asia-Pacific trading on Thursday. Wall Street S&P 500 index futures fell 0.4%, while London’s FTSE 100 index futures fell 0.6%.

After the Federal Reserve maintained its main interest rate in the range of 0% to 0.25% on Wednesday, the stock market weakened.But the consensus among Fed officials turned Interest rates rise in 2023, The earliest from the previous 2024 forecast ahead of schedule.

According to estimates by Fed officials, this year’s core inflation rate is expected to be 3%, which is much higher than the 2.2% expected in March.

U.S. Treasury yields rise as prices fall, Stable after jumping After the Fed’s announcement. After rising by nearly 0.1 percentage point in the previous trading day, the 10-year US Treasury bond yield fell slightly by 0.01 percentage point to 1.569% during the Asian trading session on Thursday. The S&P 500 index closed down 0.5% on Wednesday.

Federal Reserve Chairman Jay Powell said, “There is every reason to believe that we will enter a labor market with very attractive numbers, low unemployment, high participation, and wages in all fields are rising.”

The Federal Open Market Committee has also retained the asset purchase plan launched last year to ease the impact of Covid-19 on the economy. Stay unchanged at $120 billion per month. Powell stated that the process of ending the plan will be “orderly, structured and transparent,” adding that any changes will be signaled “in advance.”

Rick Rieder, BlackRock’s global fixed income chief investment officer, said: “We don’t think that scaling down the plan will put real pressure on the economy or the market.” “The biggest risk today is the overheating paradigm. It is difficult to predict how high the input or wage costs will be.”

Chinese stocks with higher interest rates Drive in Global investors looking for better returns dismissed the Fed’s statement. Data show that the price of new homes nationwide rose steadily in May, and the Shanghai and Shenzhen 300 Index rose by 0.7%. Hong Kong’s Hang Seng Index has not changed much.

The expectation of policy tightening also suppressed oil prices. The international benchmark Brent crude oil fell 1% to US$73.68 per barrel. The American marker West Texas Intermediate crude oil fell 0.9% to US$71.50 per barrel.

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