Asian share markets slumped on Thursday and European stocks were poised for a lower open after Federal Reserve meeting minutes pointed to a faster-than-expected rise in U.S. interest rates due to concerns about persistent inflation.

U.S. stocks sold off overnight after investors interpreted minutes from the Fed’s December meeting as being more hawkish than expected.

Fed policymakers said a “very tight” job market and unabated inflation might require it to raise interest rates sooner than expected and begin reducing its overall asset holdings as a second brake on the economy, the minutes showed.

“Of course if you’re pricing in a faster price pace of Fed tapering, that doesn’t translate well for Asian asset classes so you are likely going to see more outflows from the region, which will translate both into weaker equities and also depreciatory pressures on the FX front,” said Carlos Casanova, senior economist for Asia at Union Bancaire Privee in Hong Kong.

Worries over higher U.S. rates combined with growing concerns about the rapid spread of the Omicron coronavirus variant to weigh on riskier assets.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell nearly 1.5% in afternoon trade before paring some losses. Australian shares slid 2.74% in their biggest daily percentage drop since early September 2020, and Japan’s Nikkei stock index fell 2.88%, its biggest daily fall since June.

Chinese blue-chips fell 1% as continuing COVID-19 outbreaks weighed on the outlook despite a private sector survey showing China’s service sector activity expanded more quickly in December.

European shares were also set to open sharply lower, with pan-region Euro Stoxx 50 futures down 2.07% in early trade. German DAX futures fell 1.7% and FTSE futures shed 1.43%.

The minutes showed Fed officials were uniformly concerned about the pace of price increases that promised to persist, alongside global supply bottlenecks “well into” 2022.

The Nasdaq plunged more than 3% on Wednesday in its biggest one-day percentage drop since February and the S&P 500 fell the most since Nov. 26, when news of the Omicron variant first hit global markets.

“There is a risk that the Fed might fall into the trap of making policy errors because they do have to perhaps hike interest rates faster than expected, but given the timing of their exit from quantitative easing, it could coincide with a slowdown in the economic cycle and also a decline in inflation on base effects,” said Casanova.

The minutes also pushed U.S. Treasury yields higher across the curve. The U.S. 10-year yield hit its highest level since April 2021 on Thursday above 1.73% and was last at 1.7299%, from a close of 1.7030% on Wednesday.

The policy-sensitive U.S. 2-year yield hit a new 22-month top of 0.8380% while the 5-year yield held near highs last seen in February 2020.

Higher U.S. yields continued to support a firm dollar, though the currency gave back some ground against the yen after touching five-year highs earlier this week, falling 0.21% to 115.86.

The euro weakened 0.05% to $1.1307 while the dollar index crept up by the same margin to 96.228.