Asian markets routed as hawkish Fed under Kevin Warsh halts rate cuts and opens door to October hike

What the Fed actually did (and why it mattered)

The decision to hold rates was widely expected — the CME FedWatch Tool had assigned a 99% probability of unchanged rates ahead of the meeting . The surprise was entirely in the Fed's forward guidance. The post-meeting statement removed a longstanding reference that most FOMC members had supported easing monetary policy . The new statement, which ran roughly 130 words — down from 341 words the prior month — pledged simply to “deliver price stability” .

The updated Summary of Economic Projections confirmed the shift. The median participant now sees the federal funds rate ending 2026 at a midpoint of 3.8%, up from 3.4% in March, implying a hike from current levels rather than a cut . The Fed also raised its 2026 inflation forecast to 3.6% . According to the Wall Street Journal, nine of 19 officials now anticipate at least one rate increase before the year is out, a sharp rise from zero in March .

Hang Seng Index — lowest since July 2025

Hong Kong’s Hang Seng Index fell 360 points, or 1.5%, to 23,950 on June 18 — its lowest level since July 2025, extending losses for a third consecutive session . The Hang Seng Tech Index also dropped sharply as risk sentiment evaporated . The Hong Kong Monetary Authority mirrored the Fed by leaving its base rate unchanged at 4.0%, which did little to stem the selling .

Asian currencies under pressure

South Korean won: The won weakened to around 1,530 per dollar, reversing a prior recovery near 1,508 as the dollar firmed on the Fed’s higher rate-path signal . Trading Economics reported the USD/KRW exchange rate rose to 1,530.0100 on June 18, up 0.17% from the previous session . Broader pressure on the won also persisted from earlier in the week amid tech-sector selling in South Korea .

Malaysian ringgit: The ringgit slumped to 4.089 against the dollar, its lowest in six months, making it one of the worst-performing Asian currencies in the region . Finimize noted that when the Fed suggests it could maintain high interest rates, U.S. bonds become more appealing, prompting global investors to withdraw funds from riskier markets — a dynamic that typically hits lower-yielding emerging market currencies first .

Indian IT stocks — Nifty IT selloff

The Nifty IT Index fell 1.58% on June 18, making it the worst-performing sector on India’s market that day . The selloff was driven by the prospect of prolonged high U.S. rates, which raises discount rates on future earnings and threatens client technology spending in the U.S. — the IT sector’s largest market .

Key individual stock moves:

• Infosys: fell 2.01% to ₹1,134.40
• TCS (Tata Consultancy Services): fell 0.69% to ₹2,207.60
• HCL Tech: fell 0.41% to ₹1,162
• Tech Mahindra: declined 1.58%

The India Today business desk noted that “the hawkish message sent by the new chief of the Fed, Kevin Warsh, that the central bank could hike rates as soon as October” directly weighed on these names . Hindustan Business Line added that the IT sector, “heavily reliant on revenue from the US market, faced pressure due to worries that prolonged high rates could negatively affect technology expenditures” .

Broader Asian context

The risk-off sentiment was not contained to currencies and specific sectors. The Nasdaq Composite plunged 354 points (−1.34%) on the same hawkish signal, closing at 26,021.66 , further pressuring tech-exposed markets globally. The broader Asia-Pacific region also saw equity declines, with the Nikkei 225 and KOSPI both under pressure as the “higher for longer” U.S. rate outlook took hold .