World stocks fell on Thursday and the dollar regained its footing on concerns over the impact of surging inflation and an aggressive policy tightening outlook from global central banks.
The Swiss National Bank raised its policy interest rate for the first time in 15 years with a surprise 50 basis point hike that soured the mood and sent the safe-haven franc up sharply.
The MSCI's benchmark for global stocks gave up earlier gains and by 0803 GMT was down 0.3 per cent. The initial positive reaction to the widely expected 75 basis point rate hike by the US Federal Reserve also fizzled out.
Later on Thursday the focus will turn to the Bank of England which is also expected to raise rates to tackle inflation, a day after the European Central Bank promised fresh support to temper a bond market rout.
The pan-European STOXX 600 was down more than 1.0 per cent, while S&P 500 e-mini futures fell 1.8 per cent.
"There's a lot of nervousness. After the initial relief to the Fed ... markets seem to have woken up that it is still a 75 basis point rate hike," Giuseppe Sersale, strategist and portfolio manager at Anthilia in Milan.
"If even the Swiss central bank surprisingly raises by half a point clearly investors imagine that the tightening of central banks is still very violent. There is very little to be cheerful about," he added.
The Fed approved on Wednesday its biggest interest rate hike since 1994. Fed officials also see further steady rises this year, targeting a federal funds rate of 3.4 per cent by year-end.
Fed projections showed US economic growth slowing to a below-trend rate of 1.7 per cent, and policymakers expect to cut interest rates in 2024.
Data on Friday showed a sharper-than-expected rise in US inflation in May, alongside a University of Michigan survey showing consumers' five-year inflation expectations jumping sharply to their highest since June 2008.
In a news conference following the Fed's latest two-day policy meeting, Fed Chair Jerome Powell said that the survey was "quite eye-catching".
"(Inflation expectations) are starting to look like they're too high. That I think is one reason why Powell wanted to do a 75 ... And I think they will also go again in July," said Joseph Capurso, head of international economics at Commonwealth Bank of Australia.
"They've got to get inflation down. They're so far behind the curve it's not funny."
MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.1 per cent, erasing earlier gains.
After retreating from a 20-year peak following the Fed meeting, the dollar regained its footing in the Asian session.
The global dollar index, which tracks the greenback against a basket of six peers, was last up 0.5 per cent at 105.29.
The Swiss franc soared after the Swiss National Bank took markets by surprise with the large rate hike. It was last up almost 1.6 per cent against the euro at 1.0225 and 1.0 per cent higher against the dollar 0.9848.
US Treasury yields rose with the 10-year yield at 3.362 per cent from a close of 3.291 per cent on Wednesday.
Oil prices recovered from a steep drop as investors focused on tight supplies. Brent crude was last up 0.3 per cent to $US118.8 ($A170.0) per barrel and US crude added 0.2 per cent to $US115.6 ($A165.4).
Gold was slightly lower as the dollar firmed. Spot gold last traded at $US1,829.4 ($A2,617.5) per ounce, down 0.2 per cent on the day.