By Chibuike Oguh
NEW YORK, Sept 16 (Reuters) - Global stocks fell on Wednesday, reversing gains from early trade, while U.S. government bond yields rose after the U.S. Federal Reserve delivered a hike in interest rates and suggested more were coming.
The Fed raised interest rates by 25 basis points, its first increase since 2023, and signalled further hikes in the months ahead. New Chair Kevin Warsh joined a unanimous vote in favor of the move.
The U.S. central bank's decision is aimed at addressing
inflation driven partly by higher oil prices.
On Wall Street, all three indexes gave up gains in early trade and were trading lower with energy and financials the main drag.
The Dow Jones Industrial Average fell 1.3%, the S&P 500 fell 0.69% and the Nasdaq Composite lost 0.37%.
"Our view is that they have done this rate hike and maybe in the future, the market may be overpricing too many hikes going forward, and it may not be as many, and that would be a good relief for risk assets as well as commodities," said Wasif Latif, chief investment officer at Sarmaya Partners. "
Concerns over rising inflation and higher government bond yields had weighed on equities in the previous two sessions.
MSCI's global equities index fell 0.52%, on track for the third straight session of losses.
European shares had closed before the Fed's decision. The pan-European STOXX 600 rose 0.46%. Britain's FTSE 100 index added 0.28% while benchmarks in Germany, France and Spain also saw gains.
U.S. yields rose, with the 2-year note yield, which typically moves in step with interest rate expectations for the Fed, rose 7.07 basis points to 4.734%.
The yield on benchmark U.S. 10-year notes rose 1.21 basis points to 5%
OIL DIPS
Oil prices fell as reports that Saudi Arabia was offering additional crude cargoes via Oman after drone attacks damaged the kingdom's oil pipeline to the Red Sea. The move appeared to ease concerns about the scale of Middle East supply disruptions.
Vessel passage through the Strait of Hormuz remained constrained as attacks in the region intensified.
Brent crude futures lost 2.69% to settle at $105.83 a barrel.
In currencies, the dollar gained against major peers including the euro and the yen following the Fed's decision.
The euro was down 0.64% at $1.147.
The Japanese yen weakened 0.47% against the greenback to 155.99 per dollar.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.57% to 100.25
In cryptocurrencies, bitcoin fell 0.22% to $75,729.93 as it continued reeling from the U.S. Senate's decision to vote against advancing comprehensive cryptocurrency legislation backed by President Donald Trump.
Spot gold fell 1.19% to $4,241.59 an ounce.
(Reporting by Chibuike Oguh in New YorkEditing by Nick Zieminski and Chizu Nomiyama)
