Asian Stocks Track US Lower After Hawkish Fed: Markets Wrap

Stocks in Asia followed U.S. equities lower as the Federal Reserve struck a hawkish tone in its latest policy statement. The dollar maintained losses and Treasury yields stabilized after briefly touching 3 percent.

Equities fell in Japan, Australia and South Korea, which reopened after a holiday. The Fed raised rates Wednesday and signaled it may pick up the pace of increases this year as unemployment falls and inflation flirts with target levels. Ten-year Treasury yields briefly crossed the 3 percent threshold after the announcement before pulling back. The dollar remained under pressure after news the U.S. 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 percent. 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.

Scott Minerd, Guggenheim global CIO, reacts to the Federal Reserve's decision to raise rates.

Source: Bloomberg

Elsewhere, West Texas held gains after the EIA reported an unanticipated draw on U.S. oil supplies. Bitcoin extended losses. The Korean won fell for a second session.

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

These are some key events to watch this week:

• Chinese central bank Governor Yi Gang will give opening remarks and a keynote speech at a Shanghai conference where top Chinese economic officials, including the banking regulator head, are speaking.
• China's consumption probably accelerated in May while production remained steady and retail sales may have gained. Factory output and fixed-asset investment are both forecast to advance in Thursday's data deluge.
• Australia employment figures are also out on Thursday.
• 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 Topix index fell 0.7 percent as of 9:10 a.m. in Tokyo.
• Australia's S&P/ASX 200 Index lost 0.3 percent.
• Kospi index fell 0.9 percent in Seoul.
• Hang Seng Index futures edged 0.1 percent higher.
• S&P 500 futures were little changed. The S&P 500 fell 0.4 percent.

Currencies

• The Bloomberg Dollar Spot Index fell less than 0.1 percent.
• The Japanese yen advanced 0.2 percent to 110.15 per dollar.
• The euro added 0.1 percent to $1.1799.
• The British pound was steady at $1.3381.

Bonds

• The yield on 10-year Treasuries rose hovered around 2.96 percent.
• Australia's 10-year bond yield fell about three basis points to 2.75 percent.

Commodities

• West Texas Intermediate crude was little changed at $66.58 a barrel after jumping 0.5 percent.
• Gold was steady at $1,299.67 an ounce.
• LME copper fell 0.5 percent to $7,221.50 a metric ton.

— With assistance by Sarah Ponczek, and Janine Wolf

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