Asia: Stocks mixed; dollar steady on Fed's outlook

[SYDNEY] Asian stocks were mixed and the dollar maintained losses after the Federal Reserve raised its outlook for US growth and held its forecast for the number of interest-rate increases next year amid benign inflation.

The Australian dollar jumped after the release of better-than-expected jobs figures.

Equity indexes in Japan fluctuated, while they rose in Hong Kong, Australia and South Korea. The S&P 500 Index ended lower after a swoon in the final 15 minutes of trading.

The Fed increased interest rates and raised its outlook for economic growth in 2018 without lifting its forecast for the number of hikes next year, while Chair Janet Yellen struck a dovish tone in her final scheduled press conference.

The Bloomberg dollar index nudged lower as Treasury yields were slightly higher in Asia.

Inflation will remain below the Fed's 2 per cent goal in the near term, but will "stabilise" around the target in the medium term, the central bank said.

An improving economic outlook should give the upcoming Jerome Powell-led Fed a free pass to continue along Ms Yellen's gradualist path toward interest-rate normalization. In a key change to its statement, the Federal Open Market Committee omitted prior language saying it expected the labor market would strengthen further.

"Markets are generally interpreting the meeting as a dovish hike," said Marvin Loh, senior global market strategist at Bank of New York Mellon Corp in Boston. "The improved view in 2018 may be driven by tax reform, which will not have a long-lasting impact."

Even though the Fed raised its benchmark rate by a quarter percentage point to a target range of 1.25 per cent to 1.5 per cent and lifted its estimate for economic growth next year to 2.5 per cent from 2.1 per cent, it still doesn't see inflation accelerating.

The European Central Bank is expected to reveal details of plans to taper asset purchases on Thursday. Comments on the outlook for 2018 will be the focus for investors as they weigh the impact of coming policy normalisation on global asset prices.

China's factory output and investment edged down amid a nationwide pollution cleanup campaign and a drive to rein in borrowing, while retail sales growth held up. Industrial output rose 6.1 per cent from a year earlier in November, in line with the projection in Bloomberg's survey.

Retail sales expanded 10.2 per cent from a year earlier, less than the estimated 10.3 per cent. Fixed-asset investment excluding rural households rose 7.2 per cent in the first 11 months of the year over the same period in 2016, in line with estimates.

The Aussie climbed to a five-week high after the release of figures showing that employment surged in November, led by hiring in the east-coast states as record-low interest rates boost confidence. Employment rose 61,600 from October - economists had forecast a 19,000 gain.

The central bank has kept its benchmark interest rate at a record-low 1.5 per cent for 16 months.

Meanwhile, crude reversed direction and slid below US$57 a barrel after the US Energy Information Administration reported that production is rising to keep up with falling inventories. Gold rose with most industrial metals.

Terminal customers can read more in our Markets Live blog.

Here are some of the key events scheduled for this week: The ECB, Bank of England and Swiss National Bank set monetary policy at their respective meetings on Thursday.

US retail sales data is due on Thursday.

European lawmakers continue to debate Brexit and weigh moves on the next step, while North America Free Trade Agreement negotiators meet again.

And these are the main moves in markets:

STOCKS

The Topix index was down 0.1 per cent as of 11.20am in Tokyo, as was the Nikkei 225 Stock Average 0.2 per cent.

Australia's S&P/ASX 200 Index rose 0.2 per cent and the Kospi index in Seoul was up 0.8 per cent.

Hong Kong's Hang Seng Index rose 0.1 per cent, while the Shanghai Composite Index was down 0.1 per cent.

Futures on the S&P 500 rose 0.1 per cent. The underlying gauge fell less than 0.1 per cent, reversing a 0.3 per cent advance.

CURRENCIES

The Bloomberg Dollar Spot Index fell less than 0.1 per cent. It declined 0.7 per cent on Wednesday, the first retreat in more than a week.

The yen fell 0.1 per cent to 112.67 per dollar after jumping 0.9 per cent.

The euro was steady at US$1.1837.

The Aussie dollar rose 0.5 per cent to 76.73 US cents.

The pound was little changed at US$1.3426.

BONDS

The yield on 10-year Treasuries rose one basis point to 2.36 per cent. It fell six basis points in its first retreat in a week on Wednesday after the Fed.

Australia's 10-year yield climbed two basis points to 2.55 per cent.

Commodities West Texas Intermediate crude rose 0.3 per cent to US$56.79 a barrel.

Gold rose 0.1 per cent to US$1,256.99 an ounce.

BLOOMBERG