HONG KONG (AP) — Asian stock markets fell sharply on Thursday. Investors reacted to the Federal Reserve’s decision to raise interest rates again by 0.75 percentage points in the US. US Federal Reserve Chairman Jerome Powell said it was too early to slow down the fight against inflation. The Fed may raise interest rates in small steps in the future, but will continue to do so for a long time.

The rapid rise in US interest rates has been felt around the world and is fueling fears of a recession. Other countries that have to pay in dollars for imported goods are also more expensive because the dollar has become more valuable due to higher interest rates. Powell acknowledged that the expensive dollar is “challenging for some countries.”

The Japanese yen was one of the currencies that fell sharply against the dollar due to higher interest rates in the US. This is because Japan has yet to raise interest rates due to relatively low inflation in the country. With Japanese markets closed for a national holiday, investors in Tokyo have yet to react to new interest rate decisions in the US.

China

In Hong Kong, the Hang Seng index fell 2.7 percent after rumors that China might scrap its strict zero-covid policy sparked a recent strong rally. However, those hopes were dashed after the National Health Commission said it would stick to that policy in the fight against the coronavirus. Businesses that benefited from hopes that the economy would reopen, such as casinos, have now cut back. Technology companies such as Tencent (minus 3.3 percent) also lost.

The Shanghai stock market lost 0.3 percent after disappointing figures from China’s services sector. According to an inquiry in October, it has further shrunk due to strict corona policy in the country.

South Korea

The Kospi in Seoul rose 0.1 percent. South Korean defense firms Victek and Korea Aerospace rose to 3 percent in response to neighboring North Korea’s launch of more ballistic missiles and large-scale military exercises in the region by the United States and South Korea. All Ordinaries in Sydney fell 1.8 percent.