Asian stocks and U.S. futures declined Thursday after Federal Reserve officials sped up their expected pace of policy tightening. The dollar and Treasury yields held gains.
An MSCI gauge of Asian shares was on track for its biggest slide in a month, though the number of stocks that rose and fell was evenly split. Japanese stocks underperformed, while Hong Kong shares fluctuated and Chinese equities ticked up. S&P 500 futures slipped after the benchmark closed off its lows as Fed Chair Jerome Powell downplayed the risk of an immediate rate increase.
Policy makers disclosed in their June communications that they are starting a discussion about scaling back bond purchases, and two hikes are likely by the end of 2023.
Bond yields jumped in Australia and New Zealand, following the move in Treasury yields as the market repriced the timing of rate increases. Asian currencies tumbled, led by the South Korean won, after a dollar index had its biggest jump in a year. Yield premiums on investment-grade dollar bonds from borrowers in Asia ex-Japan widened.
Elsewhere, the Australian dollar pared its overnight losses after employment data beat estimates. Crude oil declined as the strengthening dollar reduced the appeal of commodities priced in the currency.