Asian stocks trade lower on hawkish US Fed policy, interest rate hike

Stocks in Asia traded mixed on Thursday after the Federal Reserve struck a hawkish tone in its latest policy statement and China reported softer-than-anticipated economic indicators for May.
 

Equities fell in Japan and South Korea, which reopened after a holiday, while Australian shares were little changed. Chinese equities outperformed even as retail sales and industrial output data disappointed. Earlier, the S&P 500 fell after the Fed raised rates and signalled it may pick up the pace of increases this year.

Ten-year Treasury yields briefly crossed the 3 per cent threshold after the announcement before pulling back. The dollar remained under pressure after news the US is discussing moving forward with tariffs on Chinese goods.

 

Fed Chairman Jerome Powell told reporters that unemployment and inflation are both low and that raising rates too slowly or quickly could be harmful. He added that the bank won’t over-react to inflation levels above 2 per cent. Powell also announced he would hold press conferences at every Fed meeting starting in January.
 

With the Fed now out of the way, investors move on to the European Central Bank, which will decide rates on Thursday. While no change is expected, investors are bracing for news on a potential end to the region’s quantitative-easing program. The Bank of Japan reports Friday.

Meanwhile, the yen was little changed after the BOJ cut some bond purchases in its regular operations. The Australian dollar dropped after employment data came in below expectations.
 

Terminal users can read more in Bloomberg’s Markets Live blog.
 

These are some key events to watch this week:
 

The European Central Bank rates decision comes Thursday with a briefing from President Mario Draghi.

The Bank of Japan June monetary policy decision and news conference is Friday.

FIFA expects more than 3 billion viewers for the World Cup that begins this week in Russia.
 

And these are the main moves in markets:

 

Stocks
 

The MSCI Asia Pacific Index fell 0.5 percent as of 11:07 a.m. Tokyo time.

Topix index declined 0.5 percent.

Hong Kong’s Hang Seng Index fell 0.1 percent.

Kospi index declined 1.3 percent.

Australia’s S&P/ASX 200 Index rose less than 0.05 percent.

Futures on the S&P 500 Index rose 0.1 percent.

Currencies
 

The Bloomberg Dollar Spot Index fell less than 0.05 percent.

The Japanese yen rose 0.1 percent to 110.27 per dollar.

The euro rose less than 0.05 percent to $1.1794.

The Australian dollar fell 0.2 percent to $0.7560.

Bonds
 

The yield on 10-year Treasuries rose less than one basis point to 2.97 percent.

Japan’s 10-year yield fell less than one basis point to 0.045 percent.

Australia’s 10-year yield fell four basis points to 2.741 percent.

Commodities
 

West Texas Intermediate crude rose less than 0.05 percent to $66.66 a barrel.

Gold fell 0.1 percent to $1,297.86 an ounce.

LME copper fell 0.6 percent to $7,216.00 per metric ton.

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