The Dow Jones Industrial Average fell 3 per cent,and the Nasdaq dropped 3.9 per cent.
Manish Bhargava,a Straits Investment Holdings fund manager in Singapore,told Bloomberg that Powell’s hawkish comments mean there will be a “lot of red on Monday” across Asian markets.
The Wall Street sell-off will weigh on an Australian share market that is already seeing the outlook for corporate earnings drop towards the end of reporting season.
“Although this results season saw more companies beat results than miss,analysts were continually cutting their earnings estimates,” UBS equity strategist,Richard Schellbach,said.
“As we expected,2023 estimates received the most downward pressure,as analysts began to bake in numbers that they believe more accurately reflect an economy that has now passed its peak.”
The US Fed has indicated it will raise rates into next year as it tries to quell demand and bring down prices for goods and services. But some investors speculated the central bank might pause or even reverse course next year if inflation subsides,leading to a rally for stocks in July and early August.
Some analysts expected Powell to bat down that talk in Friday’s speech,and he delivered. His speech followed up remarks by several other Fed officials,who also pushed back on speculation the Fed might act less aggressively or even “pivot”.