The majority of Asian currencies remained solvent amid important central bank meetings in the region but Asian markets, in general, struggled to keep their head above water as US debt yields declined.
There were significant declines in key equity benchmarks in Japan, Hong Kong, China and Australia.
Meanwhile, Singapore and Malaysia did not see much variation in the wake of the US Federal Reserve’s widely expected interest rate hike.
Commenting on the uncertain conditions, Fidelity International global economist Anna Stupnytska told The Business Times: “Emerging market economies have already been facing tighter financial conditions this year, which have resurfaced some vulnerabilities as capital flows started reversing.
“With the trade war rhetoric unlikely to de-escalate any time soon, the overall risks to US and global growth are clearly skewed to the downside.
“This means the Fed will have to strike a more cautious tone, slowing the pace of tightening next year, but we are not there yet.”
Phillip Futures investment analyst Samuel Siew said: “With so much unpredictability happening with regard to trade, we expect indices to remain volatile and react to any sudden updates in relation to trade.”
In a statement, the US’ Federal Open Market Committee (FOMC) said: “The stance of monetary policy remains accommodative.”
Analysts said this could mean that the US central bank may believe the policy rate is getting closer to neutral.
OCBC Research said: “The US dollar may continue to spin its wheels in the mud given that the outcome proved to be less hawkish than some quarters in the market had expected.”
There were also big losses on Wall Street following the Federal Reserve’s eighth rise since the tightening of regulation began in late 2015.
The US central bank raised its policy rate by 25 basis points to a 2-2.5 percent range, following a drawn-out two-day meeting.
Most analysts predict there will be another hike at the December meeting.
The Japanese Nikkei 225 was the hardest hit in the region with an almost one percent loss.
Analysts partly attribute the drop to cashing in after an eight-day bullish period, while China’s Shanghai Composite fell by 0.5 percent.
Rick Rieder, BlackRock chief investment officer of global fixed income, said: “We think words yesterday spoke louder than actions in the FOMC’s statement.”
He added: “While we know today that the Fed did and should have raised policy rates by 25 bps, and is very likely to do so again at its December meeting, it is when and where they stop raising rates that we think is much more interesting for markets.”