Asia stocks follow Wall Street down as Fed fights inflation

BEIJING (AP) — Asian stock markets followed Wall Street lower on Thursday after the Federal Reserve delivered another big interest rate hike and raised its outlook for more to cool galloping inflation.

Shanghai, Tokyo, Hong Kong and Sydney declined. Oil prices edged higher.

Wall Street's benchmark S&P 500 index fell 1.7% on Wednesday to a two-month low after the Fed raised its benchmark lending rate by 0.75 percentage points, three times its usual margin. The Fed said it expects that rate to be a full percentage point higher by year's end than it did three months ago.

“The Fed still managed to out-hawk the markets,” Anna Stupnytska of Fidelity International said in a report. “Economic strength and a hot labor market point to a limited trade-off — at least for the time being — between growth and inflation.”

The Shanghai Composite Index sank 0.2% to 3,111.37 and the Nikkei 225 in Tokyo slid 1% to 27,053.10. Hong Kong's Hang Seng tumbled 1.8% to 18,107.09.

South Korea's Kospi sank 1.2% to 2,320.22 and India's Sensex opened down 0.4% at 59,456.78.

New Zealand edged up less than 0.1% while Southeast Asian markets declined.

The Fed and central banks in Europe and Asia raising rates to slow economic growth and cool inflation that is at multi-decade highs.

Traders worry they might derail global economic growth. Fed officials acknowledge the possibility such aggressive rate hikes might bring on a recession but say inflation must be brought under control. They point to a relatively strong U.S. job market as evidence the economy can tolerate higher borrowing costs.

“The Fed’s new economic projections highlight it will tolerate a recession to bring inflation down,” said Gregory Daco of EY Parthenon in a report.

The yield on the 2-year Treasury, or the difference between the...