The global stock markets were hit by the Fed’s hawkish stance as government bond yields surged, pressing on equity valuations. Wall Street tumbled amid risk-off sentiment, while the US 10-year Treasury yield soared 14 basis points to 4.5%, the highest since 2007. The selloff was particularly in growth stocks, with the tech-heavy index, Nasdaq, shedding 1.8%, closing below the 100-day moving average for the first time since 13 March. From a technical perspective, the index emerges a potential head-and-shoulder top pattern, indicating increasing selling pressure could be ahead. And the VIX jumped 16% to 17.5 due to prevailing risk-off trades.
In FX, the US dollar index pulled back from a day-high level as the dollar weakened sharply against the Japanese Yen ahead of the BOJ’s policy meeting later today. Markets are awaiting if the bank will further tweak its policy stance on the bond yield curve control. On the other hand, both BOE and SNB kept their policy rates unchanged on economic concerns. Despite sticky inflation in the UK, recession risks overweighed the cost-of-living crisis. The decisions put further pressure on both the British Pound and the Swiss Franc, while the Eurodollar bounced back from a session low.
Asian markets also finished in a sea of red as bond market turmoil spilled over to the APAC region. And futures point to a lower open in Asia, the Nikkei 225 futures fell 1.07%, the ASX 200 futures slid 1.25%, and the Hang Seng Index futures were down 0 48%.
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