Hong Kong CNN Business  — 

Global stock markets dropped Thursday after the US Federal Reserve signaled it that will move quickly to hike interest rates.

Asian markets tumbled. Japan’s Nikkei (N225) slid 3.1% to close at its lowest level in 14 months and South Korea’s Kospi slipped into a bear market after declining 3.5%. China’s Shanghai Composite Index fell 1.8% to its lowest level since July, and Hong Kong’s Hang Seng (HSI) shed 2%.

Europe’s Stoxx 600, which includes companies from 17 countries, dropped 0.2% in early trading. Most major European indexes lost ground, but the United Kingdom’s FTSE 100 (UKX) bucked the trend, rising 0.4%.

The declines come after Federal Reserve Chairman Jerome Powell signaled that the Fed is preparing to raise interest rates at its meeting in March. Powell also indicated during a press conference that rates could climb more quickly than many analysts had anticipated.

The Fed boss said that the US economy and labor market are strong enough to tolerate higher rates, which are needed to reduce inflation. Analysts at BNP Paribas, who had expected the central bank to raise interest rates four times this year, revised their estimate to six hikes after Powell spoke to reporters.

“Chair Powell refused to be dragged in a debate on the likely pace and extent of rate hikes, but we read these comments as an indication the Fed’s bias is for more frequent hikes than we had anticipated,” BNP Paribas analysts told clients.

US stocks sold off during Powell’s press conference and ended Wednesday with small losses. US futures were mixed on Thursday.

Tech stocks, which boomed as central banks around the world unleashed huge amounts of stimulus to protect the economy during the pandemic, have come under significant pressure in recent weeks.

Asian tech shares fell heavily on Thursday. An index in Hong Kong tracking the largest Chinese technology companies sank more than 4%. Alibaba was down more than 7%. Softbank (SFTBF) and Tokyo Electron — a big Japanese semiconductor and electronics firm — fell 9% and 4.8%, respectively, in Tokyo.

Expectations for higher US rates pushed a key dollar index to the highest level in nearly a month. The US Dollar Currency Index — which measures the greenback’s strength against a basket of currencies used by US trade partners — is up 0.8% to trade at 96.65.

The International Monetary Fund warned recently that emerging market and developing economies should prepare for possible turbulence in financial markets as the United States and Europe lift policy rates.

“Higher returns elsewhere will incentivize capital to flow overseas, putting downward pressure on emerging market and developing economy currencies and raising inflation,” the organization said in its world economic outlook report on Tuesday.

Chinese President Xi Jinping last week urged central banks in the West not to hike interest rates too fast to fight inflation, as his country goes in the other direction to battle a sharp economic slowdown.