Asian stocks, US futures regain footing after Fed rate shock

Asian stocks recovered some of their steep losses from the previous session on Friday after U.S. markets limited further declines from hawkish U.S. Fed comments, supported by a firm economy and strong earnings at Apple Inc.

U.S. stock futures rose in Asia with Nasdaq 100 e-minis up 1.2% and S&P 500 e-minis up 0.8% after Apple on Thursday reported record sales in the holiday quarter, beating estimates. Apple shares rose over 5% in after-hours trading.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.2% after sliding 2.26% on Thursday. The index is still down 5.1% so far this month.

Australian shares were up 1.16%, while Japan's Nikkei stock index rose 1.49%.

Elsewhere in Asia, China equities rose on Friday with China's blue-chip CSI300 index 0.24% higher. Hong Kong's Hang Seng index was down 0.41%.

On Wall Street, U.S. stocks retreated after a solid opening, as investors juggled positive economic news with mixed corporate earnings, geopolitical unrest and the prospect of a more hawkish Federal Reserve.

The Dow Jones Industrial Average fell 0.02%, the S&P 500 lost 0.54% and the Nasdaq Composite dropped 1.4%.

U.S. markets had opened higher after the Commerce Department's advance take on fourth-quarter GDP showed the U.S. economy in 2021 grew 6.9% at its fastest pace in nearly four decades.

But gains were pared as investors processed how strong economic growth might inform the Fed's thinking.

In its latest policy update on Wednesday, the Fed indicated it was likely to raise rates in March, as widely expected, and reaffirmed plans to end its pandemic-era bond purchases that month before launching a significant reduction in its asset holdings.

The prospect of faster or larger U.S. interest rate hikes, however, helped push the dollar to its best week in seven months. The dollar rose 0.1% against the yen to 115.45, closing in on its high this year of 116.34 on Jan. 4.

"USD pushed through resistance overnight as it built on its FOMC gains. Generally better than expected U.S. economic data helped the USD," CBA analysts said in a note.

The yield on benchmark 10-year Treasury notes rose to 1.8155% compared with its U.S. close of 1.808% on Thursday. The two-year yield, which rises with traders' expectations of higher Fed fund rates, touched 1.1981% compared with a U.S. close of 1.192%.

U.S. crude ticked up 0.67% to $87.19 a barrel. Brent crude reached $89.34 per barrel.

Persistent tension between Russia and Ukraine had pushed oil prices to seven-year highs earlier in the week.

Gold dipped slightly. Spot gold was traded at $1796.06 per ounce. [GOL/]

 

(Reporting by Julie Zhu; editing by Richard Pullin)