Asian stocks retreat, dollar holds gains on hawkish Fed statement

Reuters: Asian stocks retreated on Thursday, taking their cues from a subdued session on Wall Street, while the dollar retained gains made after the Federal Reserve delivered a hawkish policy statement.

At the end of its two-day meeting, the Fed kept its benchmark interest rate steady as expected, but downplayed weak first-quarter economic growth and emphasised the strength of the labour market, a sign it was still on track for two more rate increases this year.

Futures traders are now pricing in a 72% chance of a June rate hike, from 63% before the Fed’s statement, according to the CME Group’s FedWatch Tool.

The dollar gained 0.1% to 112.83 yen, its highest since March 20, after surging 0.6% on Wednesday to close at the session high.

The dollar index, which tracks the greenback against a basket of trade-weighted peers, climbed 0.1% to 99.332, building on Wednesday’s 0.2% jump.

MSCI’s broadest index of Asia-Pacific shares outside Japan slid 0.15% in early trade on Thursday.

Japan is closed for the Golden Week holiday. South Korea’s KOSPI bucked the weaker trend and was up 0.5% after touching an all-time high earlier in the session on strong corporate earnings.

Overnight, Wall Street closed flat to lower.

The Nasdaq fell 0.4% as Apple shares slid after reporting lower than expected iPhone sales on Tuesday.

The index was also dragged lower by Facebook and Tesla, both of which dropped during the session and after hours, despite upbeat quarterly results.

In Europe, Germany ended higher but Britain and France closed lower. The pan-European STOXX 600 index lost 0.04% to slip from a 20-month high.

The euro was steady at $1.0889 early on Thursday, after losing 0.4% on Wednesday.

Gold was flat at $1,238.31 an ounce, failing to regain any of Wednesday’s 1.5% loss after the dollar strengthened on the Fed’s statement.