By Kenan Machado
Asian stocks were split early on whether to rise or fall in the wake of the Federal Reserve’s overnight statements on policy and economic projections.
Japan was again a standout, with equities building on this week’s two-year highs as the yen continued to retreat. Meanwhile, Australia underperformed as metal prices fell and utilities stocks slid.
The Nikkei /zigman2/quotes/210597971/delayed JP:NIK +1.81% was recently up 0.7%, putting it just 2% away from hitting levels last seen in 1996. The yen has dropped to ¥112.50 per dollar /zigman2/quotes/210561418/realtime/sampled JPYUSD -0.5067% , a full yen weaker than where it was when Japan stock trading ended Wednesday.
As expected, the Bank of Japan made no policy changes at its monthly meeting.
Insurance companies and exporters continued to gain due to the weaker yen and rising bond yields. Many financial stocks were up 2% and auto makers gained at least 1%.
In Australia, the S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO +0.69% was recently down 0.7%; some mining companies fell more than 1% as a stronger U.S. dollar depressed metal prices. In addition, utilities stocks fell 1.7%, nearing 2017 lows.
Meanwhile, there is some concern that the Fed is doing more to contain financial risk than get inflation higher, said IG Markets strategist Chris Weston. He noted that could prompt Australia’s central bank to take the same view, considering the country’s high levels of household debt.
U.S. stocks had little reaction to news from the Fed, which still expects a third rate rise this year and three more in 2018.
On Thursday in Asia, China /zigman2/quotes/210598127/delayed CN:SHCOMP +0.40% and Korea /zigman2/quotes/210598069/delayed KR:180721 +0.88% logged small early declines while Taiwan and Hong Kong /zigman2/quotes/210598030/delayed HK:HSI +1.48% rose slightly.
Still, “going into the meeting, investors may have expected a more dovish outcome — especially on the interest rate projections,” said Steven Friedman, a senior economist at BNP Paribas Asset Management.
Despite leaving rates unchanged, the U.S. central bank sounded optimistic about the economy, even as persistently low inflation prompted some officials to voice greater skepticism about another rate move this year.
Gold fell about 1% on the Fed news and oil futures in Asia were little changed. They jumped nearly 2% overnight. Japan Petroleum /zigman2/quotes/201212147/delayed JP:1662 +1.64% rose 3% and Australia’s Santos /zigman2/quotes/207349564/delayed AU:STO 0.00% gained 2%.