Asia: Stocks slump as dovish Fed minutes spur yen

[SYDNEY] Asian equities followed US stocks lower, with Japanese shares slipping after minutes from the Federal Reserve's latest meeting were deemed dovish enough to send the yen climbing.

Stocks in Australia and Japan led declines in Asia after the S&P 500 index slipped from all-time highs. While the yen strengthened a second day, the US dollar was higher against most other major peers, recovering some of the previous session's losses. Treasuries maintained gains.

The euro was steady after briefly falling below US$1.05 for the first time in more than six weeks, as French centrist Francois Bayrou bowed out of the presidential race in favour of independent candidate Emmanuel Macron.

Fed policy makers expressed confidence they can take their time raising rates as there's little threat inflation will suddenly accelerate. Officials wrestled with uncertainty on issues ranging from the Trump administration's fiscal stimulus plans to the headwinds a rising dollar may pose.

The odds for an increase in March retreated to 36 per cent. Allianz SE chief economic adviser Mohamed El-Erian said that seems "too low".

What traders are likely to be watching out for: Glencore Plc reports 2016 earnings that may be buoyed by asset sales and cost cuts, coupled with higher commodity prices. Reinvestment or return of excess cash will be a key value driver, and analysts will be looking for more detail on the Rosneft oil deal.

Singapore is expected to report inflation accelerated in January; Japan's Cabinet Office will issue its Monthly Economic Report.

Currencies

The Bloomberg Dollar Spot Index rose 0.2 per cent as of 10:56am in Tokyo, after falling 0.2 per cent on Wednesday. The yen climbed 0.1 per cent to 113.19 per US dollar, extending a 0.3 per cent gain from the previous day.

The Korean won rose 0.3 per cent, climbing for a third day. The central bank kept its policy interest rate unchanged for an eighth month as improvements in exports and inflation offset concerns over a political scandal that's hurt domestic confidence.

The euro slipped less than 0.1 per cent to US$1.0553 after gaining 0.2 per cent on Wednesday.

Stocks

Japan's Topix index declined 0.5 per cent, following three days of gains. Australia's S&P/ASX 200 Index slid 0.2 per cent, while New Zealand's S&P/NZX 50 Index advanced 0.4 per cent. South Korea's Kospi was little changed.

The Hang Seng China Enterprises Index advanced 0.3 per cent, after a 1.2 per cent jump on Wednesday, while the Shanghai Composite Index fell 0.1 per cent.

Futures on the S&P 500 were flat after the benchmark index lost 0.1 per cent. The Stoxx Europe 600 Index gave up earlier gains to end little changed.

Bonds The yield on 10-year Treasuries was at 2.42 per cent, after sliding two basis points on Wednesday.

Commodities

Oil climbed 0.8 per cent to US$54.03 a barrel, after a 0.9 per cent drop in the previous session. An industry report showed US crude stockpiles fell, in a sign that government data due Thursday may show the first contraction this year.

BLOOMBERG