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Market Sell-Off Following Fed’s Rate Hike

In regards to the agitating 7.9% inflation in the US recorded in February and hitting a 40-year high Consumer Price Index (CPI) in March of 2022, The Federal Reserve Board has conveyed initiatives to raise interest rates by 0.5%. Although this demarche is perceived as a fairly strong move after triggering the highest hike in two decades, the Fed has alerted investors to expect the rates to soar even higher in months to come. Following this trade-revamping policy, a great number of investors have sold out prominent parts of the market, this resulting in a sell-off that ultimately prompted Wall Street’s unavoidable decline. Tech stocks were among the biggest losers from the bump-up. The Nasdaq Index fell sharply by 3.2% to settle at 11.3, following its underwhelming first quarter performance. With less than one-third of the second quarter remaining, the index is presently down 21% for the year. In addition, Asian and European markets declined in tandem with the US market. Asia's stock markets have fallen to their lowest level in nearly 15 months in response to the Federal Reserve's action. Hong Kong's benchmark Hang Seng index fell by 3.8%, while shares on the Shanghai Stock Exchange were down by 2.2%. On top of that, the Fed’s decision also negatively impacted the cryptocurrency market. The global crypto market cap decreased by 7.5% to US$1.67 trillion on Friday (5/6). Its in-group leader Bitcoin (BTC) fell as much as 8.4% to US$36,410 while Ethereum (ETH) was trading lower by 6.8% at US$2,743.

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