Asian shares slide as U.S. Federal Reserve mulls interest rate hikes to combat inflation
The Fed comments added to investor unease over the war in Ukraine, coronavirus outbreaks in China and persistent high inflation.
At the meeting, the Fed raised its benchmark short-term rate by a quarter percentage point, the first increase in three years. The minutes showed many Fed officials wanted to hike rates by an even bigger margin last month, and they still saw “one or more” such supersized increases potentially coming at future meetings.
Overnight, the S&P 500 fell 1 per cent to 4,481.15, adding to its losses from a day earlier. The Dow Jones Industrial Average dropped 0.4 per cent to 34,496.51 and the tech-heavy Nasdaq lost 2.2 per cent to 13,888.82.Tech stocks were the biggest drag on the benchmark S&P 500. Apple fell 1.8 per cent and Microsoft shed 3.7 per cent.
A faster reduction in the Fed’s balance sheet would help push up longer-term rates, but also raise borrowing costs for consumers and businesses. Traders are now pricing in a nearly 77 per cent probability the Fed will raise its key overnight rate by half a percentage point at its next meeting in May. That’s double the usual amount and something the Fed hasn’t done since 2000.
On Thursday, U.S. benchmark crude gained $1.60 to $97.83 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the standard for international pricing, jumped $1.87 to $102.94 per barrel.
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