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Asia Stocks Seen Mixed After Fed's Hawkish Note: Markets Wrap

Andreea Papuc
An eagle sculpture stands on the facade of the Marriner S. Eccles Federal Reserve building in Washington, D.C., U.S., on Friday, Nov. 18, 2016. Federal Reserve Chair Janet Yellen told lawmakers on Thursday that she intends to stay in the job until her term expires in January 2018 while extolling the virtues of the Fed's independence from political interference. Photographer: Andrew Harrer/Bloomberg

Asia stocks are set for a mixed start after U.S. equities ended lower as the Federal Reserve struck a hawkish tone in its latest policy statement. Treasury yields touched 3 percent and the dollar retreated from the session’s highs.

Japanese equity futures fell, while they were little changed in Australia and nudged higher in Hong Kong. The Federal Open Market Committee on Wednesday raised rates 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, while the dollar was down against most of its major peers. The S&P 500 Index closed near its low for the day.

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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.

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Elsewhere, gold and copper advanced, while West Texas crude jumped after the EIA reported an unanticipated draw on U.S. oil supplies. Bitcoin extended losses.

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

These are some key events to watch this week:

  • 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

  • Futures on the Nikkei 225 Stock Average fell 0.5 percent in Singapore.
  • Australia’s S&P/ASX 200 Index futures were 0.1 percent lower.
  • Hang Seng Index futures edged 0.1 percent higher.
  • S&P 500 futures opened little changed as of 7:04 a.m. in Tokyo. The S&P 500 fell 0.4 percent.

Currencies

  • The Bloomberg Dollar Spot Index declined 0.1 percent, its biggest drop in a week.
  • The Japanese yen advanced 0.1 percent to 110.26 per dollar in early trading.
  • The euro was steady at $1.1794 after climbing 0.4 percent.
  • The British pound traded at $1.3378.

Bonds

  • The yield on 10-year Treasuries rose about one basis point to 2.97 percent, the highest in more than two weeks.

Commodities

  • West Texas Intermediate crude was little changed at $66.59 a barrel after jumping 0.5 percent.
  • Gold was steady at $1,299.74 an ounce.
  • LME copper advanced 0.5 percent to $7,257 a metric ton.

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