Asia-Pacific Markets Slide on Wall Street Weakness Ahead of Fed Rate Decision

Major Asian equity indices declined Thursday as Wall Street's losses carried over, with investors bracing for the U.S. Federal Reserve’s rate decision on December 10. The S&P 500 closed 0.7% lower, while the dollar strengthened against the yen and the euro.

Asian stock markets closed lower on Thursday, mirroring a sell-off on Wall Street ahead of the U.S. Federal Reserve’s pivotal policy meeting. The S&P 500 dropped 0.7% in the prior session, weighed down by tech stocks, with Apple (AAPL) and Tesla (TSLA) each shedding over 1.5% amid growing speculation that the Fed may hold rates steady but signal a cautious approach to future cuts. The dollar index (DXY) rose 0.4% to 105.83, reflecting heightened demand for safe-haven assets amid uncertainty. USD/JPY climbed to 154.60, its highest level since October, as traders priced in potential rate differentials favoring the U.S. dollar. The global market mood was shaped by the Fed’s upcoming decision on December 10, which could influence monetary policy trajectories across major economies. With inflation data showing persistent core PCE pressures, expectations of a hold have been reinforced, though markets are now pricing in a 35% chance of a rate cut in March. This uncertainty has triggered risk-off sentiment, particularly in equities linked to interest rate sensitivity, including technology and consumer discretionary sectors. In regional markets, Japan’s Nikkei 225 fell 0.9%, while Australia’s ASX 200 dropped 0.6%. South Korea’s KOSPI declined 0.8%, with Samsung Electronics and LG Energy Solutions under pressure. China’s CSI 300 edged down 0.3%, as weaker-than-expected industrial production data added to concerns about a fragile recovery in the world’s second-largest economy. Bond yields across the region rose, with 10-year Japanese government yields hitting 0.98%, the highest since late 2023.