And how severe it is will be determined on how long it takes inflation to come down.”Īrt Hogan, chief market strategist at B. Speaking to CNBC, Oanda senior market analyst Ed Moya said, “The Fed’s paved the way for much of the world to continue with aggressive rate hikes, and that’s going to lead to a global recession. INX) is doing it even tougher, down 21.7% year-to-date, officially in bear market territory.Īs for tech shares, the NASDAQ is down a painful 30.1%, while here in Australia the S&P/ASX All Technology Index (ASX: XTX) has crashed 34.5%.Īnd with the Fed boosting aggressively, the RBA and other leading central banks may be more inclined to do the same to get their own nations’ rocketing inflation under control, which could continue to throw up some tailwinds for ASX 200 shares in the months ahead. Is the Fed targeting stock markets?Īfter a strong run in 2021, the ASX 200 is now down 13.2% in 2022 amid the new dawn of rate rises from the US Fed, the RBA, and a host of central banks the world over. The majority of FOMC have upped their forecasts and believe rates in the US will top out above the 4.5% that markets have priced in.īloomberg Economics reported its team expects the terminal rate will ultimately be 5%. But they’re not as painful as failing to restore price stability and having to come back and do it down the road again.Īlso roiling global markets and the ASX 200 is the higher rate expectations expressed by members of the Federal Open Market Committee. Higher interest rates, slower growth and a softening labour market are all painful for the public that we serve. I wish there were a painless way to do that. Here’s what Powell told journalists after the announcement (courtesy of Bloomberg): And US stocks, and the ASX 200 today, appear to be selling off on what Powell indicated may lie ahead. In fact, you may have even expected somewhat of a relief rally, as an increasing number of economists had forecast the Fed might raise by a full 1.00%.īut then markets tend to be forward-looking. This brings the benchmark rate in the world’s largest economy to a range of 3.00% to 3.25%. Stock markets had widely priced in the US Fed’s 0.75% rate rise. While that move was widely expected, Fed chair Jerome Powell’s decidedly hawkish words sent US markets sharply lower over the past two trading days. That means ASX 200 shares are playing some catchup with their global peers following Wednesday night’s 0.75% interest rate hike by the US Federal Reserve. ![]() The S&P/ASX 200 Index (ASX: XJO) is taking a tumble today, down 1.81% at the time of writing.Īussie markets were closed yesterday as part of the national holiday in honour of the Queen’s passing.
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