Asian markets and currencies declined on Thursday, reflecting a global sell-off after the U.S. Federal Reserve announced its third consecutive interest rate cut but signaled fewer reductions in 2025.
The Bank of Japan (BoJ) maintained its policy rate at 0.25% for the third straight meeting. Following the decision, the Nikkei 225 traded 0.7% lower.
Meanwhile, Australia’s S&P/ASX 200 dropped 2%, South Korea’s Kospi 200 slid 1.7%, China's Shanghai Composite fell 0.7% and Hong Kong’s Hang Seng index lost 1%.
The Hong Kong Monetary Authority followed the Fed with a 25-basis-point rate cut, keeping its currency closely aligned with the U.S. dollar.
Meanwhile, New Zealand entered a technical recession, with its economy contracting by 1% in the September quarter, following a 0.7% decline in the previous quarter.
The overnight market turmoil began in the U.S., where the Dow Jones Industrial Average plummeted 2.6% to 42,326.9, marking its first 10-day losing streak since 1974. The S&P 500 lost 3%, and the Nasdaq Composite dropped 3.6%.
The Fed’s 25-basis-point rate cut, lowering its benchmark to a range of 4.25% to 4.5%, was widely anticipated. However, Chair Jerome Powell indicated only two rate cuts are expected in 2025, down from four in the previous forecast.
“We moved pretty quickly to get to here, and I think going forward obviously we’re moving slower,” Powell said.