Global markets have been responding noticeably to the Fed's statement yesterday hinting towards a December interest rate hike if market conditions continue heading in the same direction. "If the incoming information supports that expectation then our statement indicates that December would be a live possibility," said Fed Chair Janet Yellen in her first public remarks in recent weeks. And it certainly seems that traders are taking notice. The MSCI Asia-Pacific Index fell 0.4 percent yesterday, while Australian shares led the way with a 1 percent drop.
Benchmark ten-year Treasury yields rose to a seven-week high on Wednesday to 2.24 percent following the announcement. Australian yields continued their six-day rise, while German yields hit a two-week high. The moves directly correlate confidence in a December rate hike.
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Though US stock exchanges closed slightly lower on Wednesday, Asian exchanges didn't seem to be facing the same fate. Japanese stocks ended Thursday near a ten-week high, with the Nikkei share average gaining 1 percent to end the day at 19,116.41, its highest close since August of this year.
Emerging markets were the hardest hit following the Fed announcements, with broad declines worldwide. Indonesia's Jakarta Composite Index fell 0.4 percent while South Korea's Kospi index weakened 0.2 percent. A Bloomberg survey of 20 developing-nation countries found extended losses on Thursday, and fears of a rate hike may increase these losses further in the coming days.