Asia stocks sag as Fed tempers Wall Street rally

A currency dealer works in front of electronic boards showing the Korea Composite Stock Price Index  (left) and the exchange rate between the South Korean won and the US dollar at a bank in Seoul March 22, 2017. — Reuters pic
A currency dealer works in front of electronic boards showing the Korea Composite Stock Price Index (left) and the exchange rate between the South Korean won and the US dollar at a bank in Seoul March 22, 2017. — Reuters pic

TOKYO, Nov 9 — Asian stocks dipped today as Wall Street took a breather after the Federal Reserve kept intact its plans to continue raising interest rates at a gradual pace, with a fourth hike for this year expected next month.

MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.06 per cent. The index was headed for a loss of 1 per cent during the week, during which it managed to rise to a one-month high yesterday.

Australian stocks were flat, South Korea's Kospi edged up 0.2 per cent and Japan's Nikkei fell 0.2 per cent.

The Fed held interest rates steady yesterday but remained on track to keep gradually tightening borrowing costs, as it pointed to a healthy economy that was marred only by a dip in the growth of business investment.

The central bank has hiked US interest rates three times this year and is widely expected to do so again next month.

The S&P 500 lost 0.25 per cent and the Nasdaq shed 0.53 per cent yesterday after the Fed's statement, and energy stocks were the biggest drag on the S&P as U.S. crude oil prices fell.

With the US midterm congressional elections out of the way, Wall Street shares had spiked midweek on a relief rally.

“The Fed meeting outcome and its statement did not produce major surprises, but it managed to reinforce views that a rate hike is coming in December and this tempered equities,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.

“The Fed statement came after a steep surge in equities and gave the markets an opportunity to sell into the rally.”

In currencies, with Treasury yields pushing up, the US dollar stood tall after advancing against its peers overnight, buoyed by Fed's largely upbeat economic outlook and its intent to keep tightening monetary policy.

Crude oil prices struggled near eight-month lows as investors focused on swelling global crude supply, which is increasing more quickly than many had expected.

The market took stock of record US crude production and signals from Iraq, Abu Dhabi and Indonesia that output will grow more quickly than expected in 2019.

US crude futures were little changed at US$60.69 (RM252.53) per barrel after falling to US$60.67 the previous day, the lowest since March 14. — Reuters

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