Stocks in Asia Retreat After Fed; Dollar Declines: Markets Wrap

Philippine Stocks Exchange (PSE) share prices are reflected on a glass panel as broker takes a break in Manila's Makati financial district February 6, 2014. Major Southeast Asian stock markets rose on Thursday, with Singapore rebounding from a 14-month closing low hit in the previous session amid gains in Asian stock markets, while bargain hunting helped Thai shares plagued with political risks. REUTERS/Romeo Ranoco (PHILIPPINES - Tags: BUSINESS TPX IMAGES OF THE DAY)

Stocks in Asia declined and European futures signaled a lower open after the Federal Reserve said inflation is close to its target, without indicating any need to waver from its path of gradually tightening monetary policy. The dollar dropped.

Hong Kong stocks underperformed just as Chinese smartphone maker Xiaomi Corp. filed for what’s expected to be the world’s biggest IPO since 2014. Chinese shares rebounded from earlier losses. Equities rose in Sydney, with recently battered Australian banks extending a recovery. Japan was closed for a holiday. FTSE 100 futures declined. The dollar retreated after hitting its highest since January, while the euro and pound gained.

Fed officials may have signaled their willingness to allow inflation to exceed their 2 percent goal somewhat by adding a reference to the “symmetric” nature of their target. The Federal Open Markets Committee also noted a soft patch in growth in the first quarter, removing a reference in the March statement that the economic outlook had “strengthened in recent months.” They balanced that out by noting strong growth in business investment.

The U.S. begins trade talks in China on Thursday, with both sides dialing back expectations. Beijing won’t agree to preconditions that include abandoning its advanced manufacturing program and agreeing to cut the trade gap by a fixed amount, a Chinese official said. American delegates said earlier that a breakthrough is unlikely, and they might leave early if unsatisfied.

“When you think about the things that have been weighing on the market -- the potential for trade war with China, Nafta breaking up, rising rates and of course the potential rolling over in growth -- I think the one that is really weighing the most heavily is trade and that’s why the market tends to swing the most violently on every new piece of news,” RiverFront Investment Group Chairman Michael Jones told Bloomberg TV.

Elsewhere, oil held below $68 a barrel as a rise in stockpiles overshadow concerns about U.S. sanctions on Iran. The Australian dollar climbed after a widening in the nation’s trade surplus and better-than-expected building approvals. Gold advanced.

Some key events coming up during the remainder of this week:

Euro-zone producer prices are scheduled for Thursday. The European Commission will present its spring economic forecasts, including growth, inflation, debt and deficit projections. Payroll gains in the U.S. probably picked up in April, with the unemployment rate forecast to drop to 4 percent, according to surveys of economists before the data reports due Friday. Earnings season continues, including Adidas on Thursday, then Alibaba and HSBC Holdings Plc on Friday. Reserve Bank of Australia releases its quarterly update of growth and inflation forecasts on Friday. Berkshire Hathaway holds its annual shareholders meeting in Omaha, Nebraska on Saturday.

And these are the main moves in markets: Stocks

Hong Kong’s Hang Seng Index fell 1.1 percent as of 2 p.m. in the city. Australia’s S&P/ASX 200 Index added 0.8 percent. Kospi index fell 0.5 percent. The Shanghai Composite Index rose 0.6 percent after dropping as much as 0.8 percent. Futures on the S&P 500 Index rose 0.1 percent. The S&P 500 declined 0.7 percent Wednesday. FTSE 100 futures fell 0.3 percent as of 7:01 a.m. in London. The MSCI Asia Pacific excluding Japan Index fell 0.5 percent.

Currencies

The Bloomberg Dollar Spot Index lost 0.3 percent. The yen rose 0.2 percent to 109.64 per dollar. The euro added 0.3 percent to $1.1982. The pound was up 0.2 percent to $1.3599. The Aussie dollar gained 0.4 percent to 75.24 U.S. cents.

Bonds

The yield on 10-year Treasuries was little changed at 2.96 percent when it began trading in London because of the holiday in Japan. Australia’s 10-year bond yield rose one basis point to 2.81 percent. German 10-year bund yield was steady at 0.58 percent.

Commodities

West Texas Intermediate crude fell 0.1 percent to $67.87 a barrel, after a 1 percent advance on Wednesday. Gold increased 0.3 percent to $1,308.64 an ounce.

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