Asia stocks dip, dollar well bid on Fed’s optimistic tone
Asian stocks were mostly lower and the dollar surged to a three-week high versus the yen after the U.S. Federal Reserve ended its massive quantitative easing programme, as expected, but laced its economic assessment with a tinge of hawkishness.
MSCI’s broadest index of Asia-Pacific shares outside Japan.MIAPJ0000PUS was down 0.6 percent.
In a statement on Wednesday after a two-day meeting, the Fed ended its quantitative easing programme of bond purchases. At its peak, the programme pumped $85 billion a month into the financial system.
The Fed did retain its basic guidance that overnight borrowing costs would remain near zero for a “considerable time”.
Tokyo’s Nikkei .N225 bucked the trend in Asia and rose 0.7 percent, as investors took heart from a significantly weaker yen and outlook for exporters following the Fed’s optimism over the U.S. economy.
The greenback benefitted as U.S. Treasury yields surged, with the benchmark 10-year Treasury note yield US10YT=RR spiking to a three-week high of 2.362 percent as market participants pulled forward expectations of when the Fed would eventually raise interest rates.
With the Fed meeting out of the way the Bank of Japan’s policy decision on Friday is next in the spotlight, with focus on whether the central bank continues to show confidence in meeting its inflation target even though growth is flagging.
Source: Reuters-Asia stocks dip, dollar well bid on Fed’s optimistic tone
