Asia: Stocks fluctuate after Fed; crude oil declines with metals

[WELLINGTON] Asian stocks swung between gains and losses after the Federal Reserve flagged risks to the US economy from turmoil in global markets and indicatedit will be gradual in raising interest rates. Oil led a retreat in commodities, while South Korea's won dropped.

Japanese shares fluctuated as the nation's central bank started a two-day meeting and Chinese stocks in Hong Kong gained. Facebook Inc's after-market bounce spurred gains in futures on the Nasdaq 100 Index. US crude snapped a two-day climb as American stockpiles data reinforced concerns over a global glut. China's central bank used this week's two money- market operations to add the most funds to the financial system in three years. Malaysia's ringgit rose to a seven-week high after Prime Minister Najib Razak maintained his fiscal-deficit target.

With 2016 proving to be one of the most volatile starts to a year on record for financial markets, the Fed's first statement since its December interest-rate hike noted officials were "closely monitoring" developments from China to Europe, for any adverse impact on the US economy. China's policy makers injected more cash into its financial system to keep borrowing costs from rising as they contend with the slowest economic growth in a quarter century and record capital outflows that drove the yuan to a five-year low this month.

"The Fed is acknowledging reality - that the outlook has become more uncertain - and is signaling that there may be fewer rate hikes," Shane Oliver, head of investment strategy in Sydney at AMP Capital Investors Ltd, which oversees about US$120 billion, said by phone. "It seems central bankers around the world are starting to respond, which ultimately should be positive for share markets."

The MSCI Asia Pacific Index was down 0.1 per cent as of 6:20 am in London, after falling as much as 0.6 percent and advancing as much as 0.3 per cent. Japan's Topix index retreated 0.3 per cent. Etsuro Honda, an economic adviser for Prime Minister Shinzo Abe, said the nation's central bank needs to boost its unprecedented stimulus.

The Bank of Japanis expected to leave policy unchanged at the conclusion of its meeting on Friday, even amid weak inflation and rising concern over gyrations in global markets. Thirty-six of 42 economists polled by Bloomberg expect the BOJ board to hold fire this week, yet 29 are predicting more easing in the foreseeable future. The European Central Bank sparked an equity rally last week when President Mario Draghi signaled further stimulus could some as soon as March.

The Kospi index in Seoul advanced 0.5 per cent after dropping as much as 1.1 per cent. Samsung Electronics Co fell 2.6 per cent after posting fourth-quarter profit that missed analysts' estimates. Australia's S&P/ASX 200 Index climbed 0.6 per cent.

Hong Kong's Hang Seng Index rose 0.1 per cent and the Hang Seng China Enterprises Index climbed 0.3 per cent. The Shanghai Composite Index dropped 1 per cent. China's benchmark seven-day repurchase rate, a gauge of interbank liquidity, fell five basis points to 2.25 per cent in Shanghai.

The People's Bank of China said it auctioned 340 billion yuan (S$73.9 billion) of reverse-repurchase agreements on Thursday, after offering 440 billion yuan two days earlier. Policy makers are helping to prevent a cash crunch before the week-long Lunar New Year holiday.

Futures on the S&P 500 and Dow Jones Industrial Average rose at least 0.2 per cent after US stocks sank Wednesday amid an Apple Inc.-led slump in technology shares. The Nasdaq futures added 0.7 per cent after Facebook's 12 per cent surge in extended New York trading. Should the social-media company's after-market price action be replicated in Thursday trading, shares may erase this year's drop.

BLOOMBERG