Asian markets slide after new Fed chair signals hawkish stance

Hawkish Fed Weakens Asian Currencies and Stocks

Asian markets opened under pressure on Thursday after the U.S. Federal Reserve, in its first policy meeting chaired by Kevin Warsh, held interest rates steady but delivered a hawkish message that rattled investor sentiment across the region. The decision to keep the benchmark rate at 3.5%–3.75% was widely expected, but Warsh’s emphasis on combating inflation and the possibility of further rate hikes sent the dollar higher and emerging market assets lower.moneycontrol

Asian Currencies Under Pressure

Emerging Asian currencies weakened broadly against a firmer greenback. The South Korean won was the worst performer, falling 0.61%, followed by the Malaysian ringgit, which declined 0.58%. The ringgit, already the worst-performing Asian currency in June after weakening more than 2% this month, extended its slide amid political uncertainty ahead of state elections and rising bets on U.S. rate hikes. The Indian rupee opened 16 paise lower at 94.69 against the dollar. The Philippine peso lost 0.34%, while the Indonesian rupiah and Taiwan dollar also slipped.straitstimes

MUFG Research noted that Warsh’s message “effectively takes rate cuts off the table,” with fed funds futures now fully pricing in a rate hike by October. The firm said a higher-for-longer U.S. rates environment remains a headwind for low-yielding currencies across the region.mufgresearch

Hong Kong and Regional Equities Slide

Hong Kong’s Hang Seng Index fell 166 points, or 0.68%, at Thursday’s open to 24,145, with the Hang Seng Tech Index dropping 0.87%. Tencent and Alibaba each retreated more than 1% in early trading. The S&P ASX 200 was down 0.35%, while the Nikkei 225 bucked the regional trend with gains.business-standard

Indian IT Stocks Feel the Strain

Indian IT stocks fell sharply as concerns mounted that prolonged high U.S. rates would curb client technology spending. The Nifty IT Index dropped 1.46%, making it the worst-performing sectoral index on the day. Infosys fell 2.31%, TCS lost 1.20%, and Tech Mahindra declined up to 3%. LTIMindtree was among the steepest losers, dropping 3.5%.indiatoday

The selloff came after a strong rally in IT stocks over recent sessions, with investors now reassessing the outlook as AI-led productivity pressures and the prospect of another Fed rate hike weighed on the sector’s near-term earnings visibility.mufgresearch