Fed Hike Sparks Global Sell-Off, Australian Shares to Open Lower

The Australian sharemarket is set to open lower following a hawkish Federal Reserve decision that saw Wall Street whipsawed overnight. The Fed raised its benchmark rate by 25 basis points to a range of 3.75% to 4%, marking the first increase in more than three years.

The move was aimed at combating persistent inflation fueled by surging oil prices amid the US-Israeli conflict with Iran. Despite expectations, the decision still caught some investors off guard, leading to a sell-off on Wall Street.

All three major US indices closed lower, with the Dow Jones falling 1.21% and the S&P 500 declining 0.45%. The Nasdaq fared slightly better, edging down just 0.01%. Brent crude futures fell 2.93% to around $105.59 a barrel.

The Fed's updated 'dot plot' signaled policymakers' expectations for future interest rate hikes, with one further increase anticipated this year. US Treasury yields climbed following the decision, with the benchmark 10-year yield closing above 5% for the first time in 19 years.