European stock index futures fell a lot more than 2. 5% after a slump of more than 4% upon Asian exchanges, while commodities and emerging market currencies dived inside a broad sell-off of riskier assets.
Global miners and Asia's large exporters were hit hard, with Rio Tinto falling 6. 2% as well as Honda Motor shedding 3. 9%.
"It is hard to disregard the macroeconomic picture, " said Tony Nunan, a risk supervisor with Tokyo-based Mitsubishi Corp.
The dollar jumped to a seven-month at the top of the prospect of higher short-term interest rates after the Fed said it might sell $400 billion of short-term Treasury bonds to purchase longer-dated debt.
The widely predicted Fed move, known because "Operation Twist", aims to stimulate the economy by making down long-term borrowing costs.
But it was the central bank's bleak assessment from the world's biggest economy that preoccupied markets, with some investors also disappointed that there have been no bolder stimulus moves, given the extent of the actual Fed's pessimism.
"The dollar's strength and the risk aversion that people have seen in recent weeks have picked up steam following the Fed, as investors came to terms with the fact they cannot pin their hopes on the bank to help the actual economy, " said Tohru Sasaki, head of Japan prices and FX research at JPMorgan Chase.
Euro STOXX 50 catalog futures fell 2. 7%. Futures for Germany's DAX and France's CAC-40 were down a lot more than 2. 5%, while financial spreadbetters in London called the FTSE 100 to open down around 2. 7%.
Japan's Nikkei fell 2. 1% and MSCI's largest index of Asia Pacific shares outside Japan slumped four. 3%, near the intraday low.
Earlier it touched a 14-month trough as capital outflows hammered emerging market strongholds for example Hong Kong and Indonesia.
Selling accelerated on Asian stock markets after HSBC's China Flash PMI showed the factory sector shrank for any third consecutive month in September, pointing to a slowdown within the world's second-largest economy.
The data suggested that China, the engine room of global growth recently, may not be able to provide much of the counterweight to flagging US and European growth.
The twin fears of US recession and a banking crisis due to Europe's sovereign debt woes have haunted equity markets, fuelling the sharp sell-off in early August and renewed weakness this particular month.
Emerging Asian equities have underperformed US stocks because the August falls, with the MSCI Asia ex-Japan index now nearly 25% below its 2011 full of April and Wall Street's S&P 500 down 15% through its peak in May.
"Twist" fails to stir
"Operation Twist" is the latest in a number of steps aimed at reviving an economy that has struggled to rebound in the 2008 financial crisis.
But investors worry that the Fed's latest plan may have little effect on lending in an economy that are stagnating, which the Fed also noted.
US stocks suffered their worst one-day drop inside a month after the central bank wrapped up its two-day plan meeting on Wednesday, with the S&P 500 falling almost 3%.
S&P index futures traded in Asia fell 0. 4%, recommending further weakness when trading resumes.
The dollar rose extensively, with the dollar index, which measures the greenback towards a basket of major currencies, gaining as much because 0. 9% to hit a seven-month high.
As investors sought safety within the highly liquid dollar, currencies of emerging economies such since the Brazilian real and the South African rand made their biggest daily losses because the 2008 crisis.
Offshore dollar/yuan forwards rose, with the active three-month contract implying the Chinese currency would depreciate in 3 months, in a reversal of one of the core bets that foreign currency markets have held all year.
Euro eases
The dinar eased to $1. 3565, heading back towards a seven-month reduced of $1. 3495 struck last week, and hit the 10-year trough versus the yen -- another benefactor associated with dampened risk sentiment -- at 103. 67 before recuperating to around 104. 10.
US Treasuries extended gains made following the Fed's announcement, with the 10-year Treasury yield falling to some new 60-year low at 1. 82%.
The Fed's intend to tilt its portfolio towards longer maturities brought the 30-year deliver down sharply to 2. 94%, a fall of 6 basis points on Thursday following a whopping 22 basis points drop on Wednesday.
Japanese federal government bond yields also fell, with the benchmark 10-year sliding around 2 basis points to 0. 965%, its lowest because November.
The Australian dollar, sensitive to expected demand for commodities -- especially through China -- dipped below parity with the US dollar for the very first time since August 9.
Oil and industrial metals, led through copper, slipped further amid worries of slowing Chinese need.
"It is another blow after the Fed's language about downside risks about the economy really hurt sentiment, " said David Thurtell, the Citigroup Inc. analyst based in Singapore. "China is the actual commodity world's only remaining crutch. "
Brent crude had been down 1. 4% at $108. 83 a barrel as well as US crude lost 1. 6% to $84. 54. Copper fell a lot more than 3% to $8, 045 a tonne, its lowest degree since November.
Source : Business - Standard