Following the Fed's rate hike, Asian stock markets strengthened, with the TOPIX index rising 1%. The bond market came under pressure, while gold and silver rebounded.

The Federal Reserve resumed interest rate hikes after a three-year hiatus, prompting a repricing in global financial markets. Australian and New Zealand government bonds weakened in early Asian trading, mirroring overnight movements in US Treasury bonds. Asian stock markets generally rose slightly. Gold rebounded, recovering yesterday's losses.

The Federal Open Market Committee (FOMC) unanimously voted 12-0 on Wednesday to raise the benchmark interest rate by 25 basis points to a range of 3.75% to 4%. The dot plot indicates that another rate hike is likely this year, with the money market currently pricing in a roughly 50% probability of another intervention in October.

U.S. stock futures stabilized in after-hours trading, providing support for sentiment in Asian markets. S&P 500 futures rose 0.5%, Nasdaq 100 futures rose 0.4%, and Dow Jones futures edged up 72 points.

Major Asia-Pacific markets subsequently rose. Japan's Topix index rose 0.8%, and the Nikkei 225 index opened as high as 0.9% before retreating to 0.18%. Australia's S&P/ASX 200 edged up about 0.3%. South Korea's main stock index opened higher but then fell back.

After falling 2% in the previous three trading days, international gold prices rebounded by more than 1% in the Asia-Pacific session on Thursday, breaking through the $4,300 mark.

Asian stock markets showed resilience, while US stock index futures stabilized and rebounded.

Amidst a global tightening of monetary policy, Asian stock markets became a safe haven for funds in early trading on Thursday. Japan's Nikkei 225 index rose 0.87% after opening, while the Topix index climbed to 0.9%.

South Korea's KOSPI index opened strong, rising 1% before paring gains to 0.6%, while the smaller-cap Kosdaq also climbed 0.57%. Australia's S&P/ASX 200 index edged up 0.16%.

The optimism in Asia-Pacific markets contrasted sharply with the dismal performance on Wall Street overnight. During regular trading hours, U.S. stocks were dragged down by financial services stocks on Wednesday, with the Dow Jones Industrial Average plunging more than 630 points, a drop of 1.2%, and the S&P 500 falling 0.5%.

However, during Asian trading hours, U.S. stock index futures quickly recovered some of their losses, with S&P 500 futures rising by about 0.2% to 0.5%, Nasdaq 100 futures rising by 0.4%, and Dow futures rising slightly by 0.1%, highlighting the market's need for correction after digesting the impact of the interest rate hike.

The bond market faced pressure at the short end, with ANZ government bonds following suit and falling.

Following the Federal Reserve's interest rate hike, the global short-term bond market was the first to come under pressure.

On Thursday morning in Asia, Australian and New Zealand government bonds weakened, following the adjustment in US Treasuries. The yield on the Australian 10-year government bond fell slightly by 2 basis points to 5.33%, while the yield on the US 10-year Treasury bond fell by 3 basis points to 4.99%.

Whether this interest rate hike signals the start of a new round of sustained tightening remains a point of contention in the market.

Byron Anderson, head of fixed income at Laffer Tengler Investments, believes that the Fed's rate hike this time is not an active initiation of a new tightening cycle, but rather an attempt to stabilize sentiment in the bond market. He wrote:

The Federal Reserve has no choice but to either raise interest rates or face a larger sell-off in the bond market, as evidenced by the 12-0 vote. The Fed is trying to calm the bond market, not to announce the start of a new interest rate hike cycle.

Daniel Siluk, portfolio manager at Janus Henderson Investors, focused on the wording changes in the policy statement. He said:

The committee removed statements attributing inflation to supply shocks, indicating that policymakers are increasingly focused on broader and more persistent inflationary pressures rather than viewing recent price increases primarily as temporary or driven by external factors.

Chris Zaccarelli, Chief Investment Officer at Northlight Asset Management, stated that historical patterns show the Federal Reserve tends to intervene multiple times once it begins raising interest rates. Zaccarelli said:

However, it remains unclear whether the specific model will involve continuous interest rate hikes or intermittent operations.

TruStage's chief economist, Steve Rick, also holds a cautious view. He points out that the ongoing conflict in the Middle East, pushing up oil prices, could keep inflation high, but there is a time lag in the transmission of monetary policy, and continued interest rate hikes would put even greater pressure on consumers and businesses. He said:

The Federal Reserve should allow this rate hike time to take effect before reassessing whether further tightening is necessary.

Oil prices fell, while gold and silver prices rebounded.

In the commodities market, crude oil prices retreated after a recent strong rebound, mainly boosted by improved supply-side expectations. Brent crude rebounded slightly to $105.84.

Saudi Arabia is reportedly seeking to restore about half of the transport capacity of the East-West oil pipeline, which was attacked by drones, within days and expects to fully resume operations in about six weeks.

Meanwhile, the situation in Iran remains uncertain. According to the Islamic Republic News Agency, Iran stated on Wednesday that it would "fight to the last drop of blood," and regional tensions are unlikely to subside completely in the short term.

The US dollar index remained near the 100 level, a weekly high. The yen rebounded slightly after weakening for three consecutive trading days, last trading at 155.97 yen to the dollar, up about 0.2%.

In the gold market , international gold prices rebounded 0.3% in early trading, approaching the $4,300 mark and recovering overnight losses.

However, it's worth noting that the market interpreted the Fed's guidance as hawkish. The US Treasury yield curve fell across the board, and the dollar strengthened. Since gold itself does not generate interest, rising interest rates are generally unfavorable for gold.

Silver also rebounded sharply, rising nearly 1.3% to $63.76 per ounce.

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