Asian Stocks Stumble Ahead of Fed Decision
Asian stocks experienced a difficult day on Wednesday as investors prepared for an expected interest rate hike by the Federal Reserve. The Fed's decision is widely anticipated to increase borrowing costs, which has dealt a significant blow to global equities that had seen several markets hit record highs in the first half of the year.
The rally was further dampened by data showing strong job creation and stubbornly high inflation, cementing expectations for an interest rate hike. Traders are pricing a more than 90% chance that board members will choose to tighten monetary policy.
Expectations of persistent inflation have pushed up 10-year US Treasury yields above 5%, a level not seen since 2007. The Bank of England is forecast to maintain its benchmark rate on Thursday as the UK economy struggles for growth.
A drop in oil prices provided some optimism, but both main contracts remain well above $100 a barrel due to the ongoing Middle East crisis. A planned summit between US President Donald Trump and Chinese counterpart Xi Jinping could also have implications for global markets, with reports suggesting they may agree to tariff reductions on certain goods.