ASX eyes gains, Wall Street slips as oil prices, bond market crank up pressure

The US stock markets reacted negatively to the Federal Reserve's decision to raise interest rates for the first time in about three years on Tuesday evening German time. The central bank announced the increase in the benchmark rate by a quarter percentage point, bringing it to a range of 3.75 to 4.00 percent. The decision had been anticipated by analysts.

Initially, the markets reacted calmly to the announcement. However, after the Federal Reserve's Chairman Kevin Warsh's press conference, the major stock market indices fell into negative territory. The Dow Jones Industrial Average fell 1.0 percent to 51,556 points, while the broader S&P 500 index dropped 0.4 percent to 7,558. The technology-heavy Nasdaq Composite remained nearly unchanged at 25,967 points, and the Nasdaq 100 index, representing the 100 largest non-financial companies by market capitalization, also remained steady at 28,937 points.

The primary reason for the rate hike is the stubbornly high inflation, which remained at 3.4 percent on an annual basis in August, according to the responsible statistical office. Even the core inflation, which is particularly relevant to the Fed, remains elevated at 2.4 percent. The Fed has a dual mandate, aiming not only for stable prices but also for full employment.

The labor market showed robustness in August, with more jobs created than expected. This development also indicated the need for the rate hike. "Read also: The Fed could write history with its interest rate decision on Wednesday"