The Federal Reserve's latest rate increase has officially taken effect, marking a pivotal moment for global financial markets. Following a two-day Federal Open Market Committee meeting, the central bank announced a 25-basis-point hike to the federal funds rate target range, bringing it to 3.75%–4.00%. While this move aligned with widespread market expectations, it still sent ripples through global capital markets.

The day after the decision, the Hong Kong Monetary Authority followed suit by raising its base rate by 25 basis points to 4.25%. Meanwhile, asset prices across the board—from U.S. equities and crude oil to gold and even A-share market expectations—have entered a fresh phase of repricing anxiety. Key questions now dominate investor attention: when will the next rate hike arrive, can international gold prices remain resilient, and will A-shares stage a recovery once the initial emotional impact subsides?

Institutions Predict One More Hike Before Year-End

According to the Fed's latest projections, 12 of 18 officials anticipate one additional 25-basis-point increase this year, four expect two hikes, and two foresee no further moves. The central bank also raised its full-year economic growth forecast and year-end inflation expectations. This has naturally led markets to ask: when exactly will the second hike come?

"Inflation is expected to decline relatively steadily over the next six months, while favorable base effects in the first half of 2027 weaken the case for consecutive rate increases," noted the UBS Wealth Management Investment Office. This marks the first hike since July 2023, ending the pause that has been in place since last December. Goldman Sachs, meanwhile, offers a baseline forecast: after this increase, the Fed will hold rates steady for the remainder of the year, followed by two 25-basis-point cuts in September and December 2027.

Market Chain Reaction: Stocks Slide, Oil Drops, Gold Shows Strength

Despite the decision meeting expectations, all three major U.S. indices closed lower. The Dow fell 1.21%, the S&P 500 declined 0.45%, and the Nasdaq slipped a marginal 0.01%. At the same time, commodity markets experienced significant volatility, with international oil prices plunging sharply. Light crude for October delivery on the New York Mercantile Exchange settled at $102.43 per barrel, down 3.21%, while Brent crude for November delivery closed at $105.83 per barrel, shedding 2.69%.

Gold, by contrast, demonstrated notable resilience against the prospect of continued rate hikes. Spot gold briefly reclaimed the $4,300 level and was trading above $4,306.38 per ounce, up more than 1%, by mid-afternoon on the following day. According to CICC, static calculations based on U.S. Treasury yields and the dollar suggest gold's support level sits around $4,200 to $4,500 per ounce. Unless there are consecutive rate hikes, downside pressure on gold appears relatively contained, though upside potential would require a more compelling macroeconomic narrative. Kaiyuan Securities adds that rate hikes are not the sole determinant of gold price movements, emphasizing the need to factor in current price levels, the magnitude of increases, and the pace of tightening.

A-Share Impact: Short-Term Sentiment, Long-Term Fundamentals

The subsequent trajectory of A-shares, the extent of their exposure, and their room for recovery have emerged as the most critical topics for investors and institutions following the rate decision. On the trading day after the Fed's announcement, all three major A-share indices posted modest declines. The Shanghai Composite fell 0.41% to close at 3,875.60 points, the Shenzhen Component Index dropped 0.33% to 13,409.91 points, and the ChiNext Index slipped 0.40% to 3,298.31 points. Sector performance was mixed, with automotive services, internet e-commerce, education, wind power equipment, and glass fiber leading gains, while precious metals, rare earths, electronic components, minor metals, and nonferrous metals lagged.

Industry experts broadly agree that the Fed's rate hike affects A-shares primarily through indirect channels. While it may cause short-term sentiment fluctuations, the medium-to-long-term trajectory remains anchored by domestic fundamentals. With the "shoe now dropped," A-shares are expected to enter a repair phase after risk sentiment releases. CICC suggests this particular hike may differ from the start of a typical tightening cycle, and whether it exerts sustained influence on A-shares remains to be seen. If this proves to be a one-off or short-lived adjustment, the impact would be relatively limited, especially given that A-shares have already priced in much of the news.

For positioning going forward, CICC further notes that the restructuring of the global monetary order and the technology narrative supporting A-shares remain intact. The firm recommends focusing on technology and growth sectors, where performance hinges critically on industry momentum and earnings delivery—with solid fundamentals, U.S. rate hikes may not necessarily weigh heavily on global growth stocks. Additionally, given geopolitical tensions and capacity cycle positions, investors should consider sectors with improving earnings and better supply-demand dynamics, such as power grid equipment and petrochemicals.