By Chibuike Oguh
NEW YORK, Aug 19 (Reuters) - Asian equities were set to
follow Wall Street's late session retreat on Thursday after the
Federal Reserve warned the U.S. economy faced a highly uncertain
path to recovery from the coronavirus-induced downturn.
Market sentiment had been bullish up until the Fed's
comments, with the S&P 500 and the Nasdaq hitting all-time highs
driven largely by Apple Inc. AAPL.O .
The iPhone maker's shares rose 1.4% to make the first
publicly listed U.S. company to reach $2 trillion in market
capitalization, with strong results from retailers Target and
Lowe's also lifting sentiment. "It was a decent day for banks, Apple, and Nike but
everything else was in the reverse after the Fed said economic
conditions will be difficult for a while," said Jamie Cox,
managing partner at Harris Financial Group.
"We've seen some good numbers out of retail but there's
uncertainty that these companies won't replicate those earnings
without some stimulus."
Wall Street's downbeat finish gave Asian markets a dour lead
with Australian S&P/ASX 200 futures YAPcm1 losing 0.25%,
Japan's Nikkei 225 futures NKc1 down 0.15% and Hong Kong's
Hang Seng index futures .HSI HSIc1 off 0.08%.
Cooling Wall Street's earlier rally were minutes from the
Fed's July meeting, which showed the swift rebound in employment
seen in May and June had likely slowed and that additional
"substantial improvement" in the labor market would hinge on a
"broad and sustained" reopening of business
activity. The readout on Fed discussions provides hints to further
action that the U.S. central bank could take in September. No
change in interest rate policy is expected until end-2021.
Wall Street stocks retreated and later closed lower on the
Fed news. The Dow Jones Industrial Average .DJI fell 0.31%,
the S&P 500 .SPX lost 0.44% and the Nasdaq Composite .IXIC
dropped 0.57%.
"The market seems to want to return to value stocks like
pharma and banks but they can't figure out how," Cox said.
Despite the dovish minutes, U.S. Treasury yields and the
dollar rose with investors focusing on parts of the minutes that
showed policymakers downplaying the need for yield caps and
targets.
Some investors had hoped the Fed would follow through on a
proposed policy to cap yields at a certain level by buying
short-term debt, a move that would reinforce the central bank's
guidance for low rates.
The benchmark 10-year Treasury notes US10YT=RR last fell
1/32 in price to yield 0.6785%, from 0.675% late on Tuesday.
The 30-year bond US30YT=RR last fell 1/32 in price to
yield 1.4154%, from 1.415%.
The dollar index =USD , which reflects the greenback's
value against six leading trading currencies, rose 0.88%, with
the euro EUR= down 0.75% to $1.184. The Japanese yen JPY=
weakened 0.62% to 106.05 per dollar.
Oil prices edged lower on Wednesday over lingering concerns
of weak global fuel demand after data showed that U.S. crude
stockpiles USOILC=ECI fell 1.6 million barrels last week.
Brent crude futures LCOc1 fell 0.55% to $45.21 a barrel.
U.S. crude futures CLc1 slid 0.33% to $42.79 a barrel.
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