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[MARKET ANALYSIS] Asia-Pac stocks trade mixed as partially weathers the hawkish FOMC meeting where the Fed hiked rates and the dotplots pencilled in another hike this year

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[MARKET ANALYSIS] Asia-Pac stocks trade mixed as partially weathers the hawkish FOMC meeting where the Fed hiked rates and the dotplots pencilled in another hike this year

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APAC Stocks: Mixed

  • Asia-Pac stocks trade mixed as the region partially weathers the hawkish reaction triggered by the FOMC meeting, where the Fed hiked the Fed Funds Rate by 25bps to 3.75-4.00%, as expected, in a unanimous decision and dot plots pencilled in another rate hike this year.

ASX 200: +0.3%

  • Index is kept afloat as outperformance in financials, healthcare and real estate offset the losses in the commodity-related sectors, but with upside capped amid a lack of bullish drivers.

Nikkei 225: +0.1%

  • Began with firm gains following a pullback in energy prices, although it has gradually faded the majority of the opening advances as participants also brace for a widely anticipated BoJ rate hike when the central bank concludes its 2-day policy meeting on Friday.

KOSPI +0.2%

  • Trades marginally higher amid tech resilience and with South Korea's Finance Minister vowing to deploy market stabilising measures if required.

Hang Seng & Shanghai Comp: Hang Seng -1.1% / Shanghai Comp -0.3%

  • Chinese markets are pressured with underperformance in Hong Kong after the HKMA raised rates for the first time since 2023 in lock-step with the Fed, while the downside in the mainland is cushioned following the PBoC's increased liquidity efforts.

US Equity Futures: +0.6%

  • Rebounded overnight to recoup most of the post-FOMC losses after slumping on the hawkish Fed.

European Equity Futures +0.4%

  • Indicate a positive cash market open with Euro Stoxx 50 futures up 0.4% after the cash market closed with gains of 0.5% on Wednesday.
Context

Hawkish-hike meetings, where the Fed delivers the expected move but signals more through the dots than the statement priced, have tended to produce a two-stage reaction: an initial sell-off in equities and front-end repricing, followed by partial retracement as desks conclude the signalling is conditional rather than committed. The overnight rebound in US futures fits that pattern and leaves the burden on incoming data to validate or fade the extra projected hike. The regional divergence is the more durable signal: markets tied to the dollar peg, Hong Kong in particular, import the tightening mechanically through the HKMA lock-step, while the mainland is cushioned by PBoC liquidity, a decoupling pattern seen in prior tightening cycles when Chinese policy runs counter to the Fed. The Nikkei's fade ahead of a widely anticipated BoJ hike is the classic pre-meeting de-risking; historically the initial reaction to a long-telegraphed first move has been prone to reversal once the event risk clears, with the yen and JGB front end the cleaner expressions than equities. Korea's finance ministry verbal intervention is standard stabilising rhetoric and has rarely shifted direction on its own. The follow-ons that matter are the BoJ outcome and any guidance on pace, US data relative to the dots, and whether PBoC easing widens the China-US rate differential further, which has been the transmission channel for CNY pressure in past episodes of this kind.

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