Global stock markets and Wall Street futures tumbled after the Federal Reserve indicated it will raise interest rates soon to cool inflation.
Equity markets have tanked following a late sell-off on Wall Street in reaction to a surprisingly hawkish turn by Chair of the United States Federal Reserve Jerome Powell, who signaled the bank would begin lifting interest rates in March.
After one of the Fed's most highly anticipated meetings on Wednesday, he said the world's number one economy was well on the recovery path with unemployment largely under control, allowing officials to begin removing the crutches put in place at the start of the pandemic.
In a news conference, he told reporters "the committee is of a mind to raise the federal funds rate at the March meeting, assuming that conditions are appropriate for doing so".
Although a March hike was penciled in by traders for several months, investors were spooked by Powell's apparent hawkishness as he refused to be drawn on a timetable for further increases nor its plans to unload assets on its balance sheet, which have helped keep costs down.
Analysts said the fact that the bank appeared less moved by recent market losses indicated to traders a high bar for the so-called "Fed put" -- referring to its willingness to backstop investors in times of trouble.
The Fed's pandemic-era financial largesse of bond-buying stimulus and record-low interest rates helped the global recovery and fuelled a two-year equity rally. But the age of cheap cash is being brought to an end as the bank embarks on a fight to bring down inflation from a four-decade high.
'Behind the curve'
Asia followed the selling with tech again at the forefront of losses, while the dollar extended a rally against most other currencies.
Seoul tanked more than three percent into a bear market , a 20 percent drop from its recent high hit in August, while Sydney fell into a correction, having given up 10 percent from its latest peak.
Tokyo also took a 3.1 percent pounding as market heavyweights Sony and SoftBank, which invests heavily in the tech sector, led losses, while Hong Kong was two percent off.
There were also painful losses in Shanghai, Singapore, Wellington, Mumbai, Bangkok and Jakarta, though forecast-beating economic data helped Manila post gains. London, Paris and Frankfurt opened sharply lower, while US futures were well in the red.
Commentators were left guessing how much the Fed will lift rates in March and how many more times it will do so, with estimates ranging from a total of three this year to as many as five. But there was concern about Powell's refusal to reassure that the increases would be tempered.
"It sounds like he is acknowledging the Fed is behind the curve and can't commit to a path that won't upset financial markets," Sameer Samana, of Wells Fargo Investment Institute, said.