Asian shares fall as US Fed pauses interest rate hike

15 Jun 2023 , 10:02 AM

On Thursday, Asian stocks collapsed from two-month highs, while the dollar suffered minor losses, after the United States Federal Reserve decided not to raise interest rates for the first time in 17 months, even though it left the door open for future hikes.

The US Fed decided to leave its benchmark fund’s interest rate at 5-5.25%, and Fed chair Jerome Powell said that the US central bank needed to collect more information regarding the economy to determine its next step.

Members of the Committee surprised markets by forecasting two more 25-basis-point hikes this year. This led to an increase in short-term US yields and ended bets on any cuts in 2023.

The euro hit a one-month high of $1.0865 after the decision and is now trading at $1.0826 ahead of a European Central Bank meeting later in the day, where markets expect an eighth straight rate hike to push borrowing costs to two-decade highs.

10-year treasury yields increased by 3 bps to 3.829%. 2-year treasury yields closed higher by 0.039% at 4.746%.

Japan’s broader index Nikkei 225 is trading 0.64% higher. Australia ASX All Ordinaries index is up by 0.24%. Shanghai SE Composite of China finished higher by 0.24%. Hong Kong’s Hang Seng closed 0.83% higher. Taiwan index is trading with a gain of 0.50%.

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