Australia

Australian shares are expected to open lower today following a poor session on Wall Street. As many investors anticipated, the US Federal Reserve announced on Wednesday a 0.5% rise in interest rates. The Fed also confirmed its plan to continue raising rates through the upcoming year.

ASX futures were down 56 points or 0.78% at 7195 as of 7:00am on Thursday, indicating a dip at the open.

US stocks turned lower after the Federal Reserve raised interest rates by 50 basis points, as expected. The Fed also signaled rates may have to move even higher than previously thought to rein in inflation.

Near the end of a choppy trading day, the S&P 500 fell 0.4% while the tech-heavy Nasdaq Composite Index dropped 0.6%. The Dow Jones Industrial Average moved 0.3% lower.

Investors had widely anticipated the Fed would announce it would raise its key policy rate by half a percentage point. What they weren't as sure of ahead of Wednesday's meeting was how much higher Fed officials see interest rates having to go next year.

Those who had been hoping the Fed might be done raising rates relatively soon may have been left disappointed. Fed officials signaled they see interest rates rising to around 5.1% by the end of next year, up from previous estimates in September of around 4.6%.

Officials also said they see unemployment rising and economic growth being tepid in 2023.

In commodity markets, Brent crude oil gained 2.85% to end at $US82.98 a barrel while gold edged down 0.28% to US$1,805.77.

In local bond markets, the yield on Australian 2 Year government bonds dipped to 3.07% while the 10 Year fell to 3.36%. Overseas, the yield on 2 Year US Treasury notes declined to 4.24% and the yield on the 10 Year US Treasury notes dipped to at 3.49%.

The Australian dollar hit 68.48 US cents slightly down from the previous close of 68.55. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, decreased to 96.80.

Asia

Chinese stocks extended their losing streak to a third session as the market continued to retreat from the rally spurred by Beijing's removal of a host of Covid-19 restrictions. Investors are looking to the economic policy meeting of the country's top leaders this week, which will set the policy tone and economic priorities for the upcoming year. Telecom and biotechnology companies weighed on the market, with both China Unicom and Beijing Wantai Biological Pharmacy Enterprise dropping 3.4%. Consumer related companies continued gaining with Shanghai Jahwa United up 3.8% and food producer Yihai Kerry Arawana rising 3.6%. The Shanghai Composite Index finished flat. The Shenzhen Composite Index declined 0.1% and the ChiNext Price Index was 0.3% lower.

Hong Kong shares finished a volatile day in positive territory as the city's reopening continued to boost investor sentiment. The benchmark Hang Seng Index rose 0.4% to settle at 19673.45. Hong Kong's tech sector, which some analysts say remains undervalued, led the gains this session. Internet and AI company Baidu rose 3.6% and gaming company NetEase added 2.3%. The Hang Seng Tech Index closed 0.3% higher at 4237.66. Online health platforms plunged, though a few recovered some ground later in the day. JD Health dropped 3.8% and Alibaba Health slid 7.1%.

Japanese stocks ended higher, led by electronics shares, as concerns about US inflation and the Fed's aggressive tightening eased. Lasertec gained 3.4% and Tokyo Electron climbed 1.9%. The Nikkei Stock Average rose 0.7% to 28156.21.

Europe

European stocks closed mostly lower as investors awaited the US Federal Reserve's latest policy decision. The Stoxx Europe 600 ended flat, the FTSE 100 declined 0.1%, the DAX slipped 0.3%, and the CAC 40 dropped 0.2%. CMC Markets analyst Michael Hewson wrote, "There was a concern [in European markets] that [Fed Chair Jerome] Powell may well deliver a hawkish statement designed to push back on market expectations of an imminent softening of the Fed's position, in an attempt to reset market optimism, which in turn could well put downward pressure on markets overnight."

North America

US stocks turned lower after the Federal Reserve raised interest rates by 50 basis points, as expected. The Fed also signaled rates may have to move even higher than previously thought to rein in inflation.

Near the end of a choppy trading day, the S&P 500 fell 0.4% while the tech-heavy Nasdaq Composite Index dropped 0.6%. The Dow Jones Industrial Average moved 0.3% lower.

Investors had widely anticipated the Fed would announce it would raise its key policy rate by half a percentage point. What they weren't as sure of ahead of Wednesday's meeting was how much higher Fed officials see interest rates having to go next year.

Those who had been hoping the Fed might be done raising rates relatively soon may have been left disappointed. Fed officials signaled they see interest rates rising to around 5.1% by the end of next year, up from previous estimates in September of around 4.6%.

Officials also said they see unemployment rising and economic growth being tepid in 2023.

"We're not out of the woods yet," said Viraj Patel, global macro strategist at Vanda Research. "We're still in a higher-than-normal inflation environment."

Investors also remained cautious about the outlook for the economy and anticipate the run-up in borrowing costs will begin to weigh on corporate profits and consumers in the coming months.

"2023 is the year when you will start to see the impact of all these rate increases," said Seema Shah, chief global strategist at Principal Asset Management. "You can see strains are certainly building up, but the actual economic numbers are pretty resilient. We don't think that will last."