The Federal Reserve's plan, announced Wednesday, to keep raising interest rates was an added headache for investors already fearful that trade wars and other geopolitical concerns would grind economic and corporate growth to a halt.
The central bank made a decision to increase its target range for the benchmark rate by 0.25 percentage point to 2.25 to 2.50 percent, it said in a statement issued after a two-day meeting of the policy-setting Federal Open Market Committee.
The quarter-point increase will mean higher borrowing costs for many consumers and businesses.
Fed Chairman Jerome Powell said growth in other economies "has moderated somewhat over the course of 2018", and that financial market volatility "has increased over the past couple of months".
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The Tokyo market opened lower, extending losses in USA shares amid worries the Fed would hike rates at a faster pace than expected, analysts said.
The S&P 500 Index dropped 1.5 per cent after policy makers raised rates for the fourth time this year and lowered their forecast for hikes next year to two from three.
The rate announcement boosted the dollar, which rose slightly against the yen Thursday.
"There's significant uncertainty about the - both the path and the ultimate destination of any further rate increases", Mr Powell told reporters.
Early gains for supermarket stocks haven't stopped the Australian sharemarket dipping to a fresh two-year low, with the bourse mirroring a Wall Street tumble following the US Federal Reserve rate hike. Wednesday's was the Fed's ninth hike since it began gradually tightening credit three years ago.
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The short-term federal funds rate influences both USA and global financial markets which had widely priced in Wednesday's hike. Many analysts think the Fed will signal that it's considering whether to slow or suspend its rate hikes in 2019 to avoid weakening the economy too much.
"It does open the door to a slower pace of increases, which translates into a more patient Fed", said Lindsey Piegza, Stifel chief economist, on CNN Business' Markets Now live show with CNN Business editor-at-large Richard Quest Wednesday. The report said Facebook had arrangements with more than 150 companies including Microsoft, Amazon, Spotify and Netflix that some companies read, write and delete users' private messages or see the names of a user's friends or their news feeds without their consent. But now, the risks of a surprise could rise. Instead, he has decided, beginning in 2019, to hold news conferences after each of the Fed's eight meetings each year, rather than only quarterly. Markets also have to adjust to losing the predictable and ample liquidity support they received from the European Central Bank (ECB). Preventing Powell from serving his four-year term would challenge the integrity of the institution, which relies on its reputation of being an independent body, free of the White House's politics.
When taken together, the latest quarter-point move, language changes and shift in rate projections indicate continued confidence in the economy, yet also greater caution over how far and fast the Fed expects to move with future hikes.
The strong United States dollar also has made American goods more expensive.
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The 3.7 percent jobless rate at a 49-year low is arguably the Fed's touchstone achievement of the post-financial crisis era. The economy is thought to have grown close to 3 percent this year, its best performance in more than a decade.
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