Asian markets were broadly lower on Thursday after the U.S. Federal Reserve raised interest rates a quarter point on Wednesday and indicated that there will be two more rate hikes in 2019. The announcement crashed trader hopes for a dovish policy outlook and sparked a selloff on Wall Street on Wednesday that spread into Asia on Thursday.
As of 2:13 p.m HK/SIN, the Nikkei 225 was down a whopping 3.07 percent. Hong Kong’s Hang Seng Index was down 1.05 percent, South Korea’s Kospi was down 1.14 percent and Australia’s ASX 200 had eased 1.34 percent. Both of China’s benchmark indexes, the Shanghai Composite and the Shenzhen Composite were also lower, down 0.50 percent and 0.20 percent respectively.
The Fed’s comments were in-line with expectations, though it’s downgraded expectations for 2019 still troubled traders. The Fed had originally projected three rate hikes for 2019, and it reduced the number to two in light of tightening financial conditions and concerns about the global economy. The Fed did assure traders that it will “continue to monitor global economic and financial developments and assess their implications for the economic outlook” – a note that was aimed to be comforting, though is to be expected from the U.S. central bank.
Oil prices continued their decline on Thursday after a positive U.S. trading session on Wednesday. The move lower resulted from fresh concerns about oversupply and the outlook for the global economy. This week’s volatility in the oil markets has encouraged investors to close their positions and is reducing liquidity in the market. With the markets easing into holiday mode, commodity traders may opt to stand to the side until the new year when OPEC’s production cuts come into effect and the holiday slump has passed. U.S. WTI futures were trading at $47.10 per barrel while Brent crude futures were down 1.54 percent to $56.36 per barrel.