Hawkish Fed drives Asian shares down
Asian share markets posted a three-week low on Thursday, with losses owed mainly to the Federal Reserve’s decision of implementing rate hikes sooner than what was previously expected. This, in turn, sent bond yields and the dollar to high levels.
While the decline was minimal, it was still strong enough to drive MSCI’s broadest index of Asia-Pacific shares outside Japan down 0.6%. Japan’s benchmark dropped 1%, while futures for the S&P 500 traded 0.4% lower.
In currency markets, the greenback secured its highest intraday performance, rising above its peers for its biggest gain in 15 months. Investors also bet in bonds, with 10-year U.S. Treasury yields advancing the most since early March.
The contraction seen in shares was due to the Federal Reserve’s imminent withdrawal from bonds, as rapid vaccinations in the United States erased the need for more asset purchases.