Japan's benchmark Nikkei 225 and South Korea's KOSPI indices have set new all-time highs. Asian markets did not react to Wall Street's worst day since the change of Fed chair in 1994. At his first meeting, Kevin Warsh kept the rate unchanged, but the updated Fed forecasts turned out to be far tougher than expected.
The Fed left its key rate in the range of 3.5–3.75%. At the same time, the new dot plot — a chart on which each committee member marks the rate level they expect by year-end — showed an increase in the median forecast to 3.8% instead of 3.4% in March.
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Nikkei and KOSPI at all-time highs
On Thursday, Asian markets opened in positive territory. The Nikkei 225 topped the 71,000-point mark for the first time in history, and the Topix index also edged up. South Korea's KOSPI set a new high after SK Hynix rose 3.45% on the back of shipping trial samples of its new HBM4E AI chip to key clients, including Nvidia. Samsung Electronics shares gained 1.23%.
A tough signal from Warsh and pressure on the crypto market
The U.S. S&P 500, Nasdaq and Dow all slumped simultaneously, unlike the Asian indices. All 11 sectors of the index closed in the red by the evening of June 17, and the yield on 2-year government bonds rose by 16 basis points — to 4.22%.
"The Fed held the rate, but the new forecasts turned out to be much tougher and soured the mood across the markets," said Sonu Varghese, chief macro analyst at Carson Group.
Kevin Warsh refrained from giving any forecast on the rate — after that, expecting an imminent Fed rate cut became harder. Currently, 9 of the organization's 18 representatives expect at least one rate hike by the end of the year.
For the crypto market, the reversal means tangible changes. Bitcoin and other risk assets respond clearly to changes in liquidity — a tightening of monetary policy creates serious pressure. In Asia, the Fed's signals are not being given much weight for now. If Warsh does initiate a rate hike, the swing in sentiment could be read very quickly.
Source: BeInCrypto
