GLOBAL MARKETS-Asian shares seen falling on 'hawkish' Fed outlook

* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Asian shares seen falling, dollar index jumps
* Fed cuts rates by 25 basis points, further cuts not
certain
* U.S. Treasury yield curve flattens

By Swati Pandey
SYDNEY, Aug 1 (Reuters) - Asian shares were set to open
significantly lower on Thursday as the U.S. Federal Reserve
poured cold water on market expectations of a lengthy easing
cycle after delivering a 25-basis-point cut.
Fed Chair Jerome Powell, speaking in a news conference after
the release of the central bank's statement, characterised
Wednesday's rate cut as "a mid-cycle adjustment to policy", a
sign to markets that sharp further cuts were not imminent.
Later in a press conference, Powell said Wednesday's easing
was "not the beginning of a long series of rate cuts", sending
U.S. equity markets into a tailspin and dollar to its highest
since May 2017 against a basket of six major currencies. .DXY
Overnight, the Dow .DJI and the Nasdaq .IXIC lost 1.2%
each while the S&P 500 .SPX declined 1.1%. MSCI's gauge of
stocks across the globe .MIWD00000PUS slipped to a five-week
low.
In a sign the gloomy mood is likely to spread to Asia,
Nikkei futures NKc1 faltered 0.3% while futures for
Australia's benchmark share index YAPcm1 fell 0.4%. E-minis
for the S&P500 ESc1 were off 0.3%.
"By not coming out and promising more cuts in the future,
the market appears to have interpreted this policy move as
hawkish," said John Velis, forex and macro strategist at BNY
Mellon.
U.S. Treasuries reacted by flattening the yield curve as the
front-end of the market US2YT=RR scaled back on prior
expectations for at least a 100 basis points of easing in the
near-term.
Notably, yields on 10-year bonds US10YT=RR too came under
pressure, suggesting "the market thinks the Fed is making a
policy mistake by not being more dovish," National Australia
Bank analysts wrote in a note.
In foreign exchange, the dollar rose against the euro and
Antipodean currencies on expectations monetary policies in
Europe, Australia and New Zealand will remain accommodative.
The dollar index .DXY finished July 2.5% higher though the
greenback's reaction against the Japanese yen JPY= was a bit
muted at 108.77
The common currency EUR= hit a more than two-year trough
of $1.1065 overnight and was last at $1.1073.
The Aussie AUD=D3 fell to $0.6832, its lowest since early
January when a currency "flash crash" briefly took it to $0.6715
while the kiwi NZD=D3 held at $0.6561 as markets wager on a
rate cut by the Reserve Bank of New Zealand next week.
In commodities, crude oil futures settled higher on
Wednesday for the fifth straight day, buoyed by a
bigger-than-expected drop in U.S. inventories, but the stronger
dollar helped bring prices down from session highs in post
settlement trading. O/R
U.S. crude futures CLc1 were off 68 U.S. cents at $57.9.
Brent had settled up 0.7% at $65.17.
Spot gold XAU= bounced from a two-week trough to add 0.1%
to $1,414.46 an ounce.

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(Editing by Sam Holmes)