Asian markets react to US Fed with heavy losses

Tokyo Asia’s markets reacted with sharp discounts to the US Federal Reserve’s suggestion that it would raise interest rates from March. Both Japan’s Nikkei 225 index and Korea’s Kospi initially opened slightly up, but then fell more than two percent below the closing levels of the previous days.

Investors from overseas in particular withdrew money in Tokyo because they had expected a more restrictive stance from the US central bank, the business newspaper Nikkei explained the fall. China’s Shanghai Composite Index, Hong Kong’s Hangseng Index and Singapore’s Strait Times Index also joined the trend, albeit stocks fell less than those of the two major East Asian exporters.

Another reason for the losses in Japan is that the US Fed has indicated that not only temporary factors such as supply shortages are driving prices, but possibly rising wages as well. “Even long-term investors are therefore gradually adjusting their positions,” said the Nikkei.