Asian stocks ease, US dollar steadies after Fed-led losses

People walking past an electric quotation board flashing the Nikkei key index of the Tokyo Stock Exchange (TSE) in front of a securities company in Tokyo, on Feb 14, 2017.
People walking past an electric quotation board flashing the Nikkei key index of the Tokyo Stock Exchange (TSE) in front of a securities company in Tokyo, on Feb 14, 2017.PHOTO: AFP

SINGAPORE (REUTERS) - Asian stocks pulled back from a 19-month high on Thursday (Feb 23), while the US dollar tried to steady from losses suffered in the wake of the US Federal Reserve minutes indicating a cautious approach to more interest rate increases.

MSCI's broadest index of Asia-Pacific shares outside Japan was fractionally lower.

Japan's Nikkei slipped 0.1 per cent, while Australian shares retreated 0.3 per cent.

Overnight on Wall Street, the Dow Jones Industrial Average ended up almost 0.2 per cent, its ninth straight record-close.

That optimism however, didn't flow through to other indexes, with the S&P 500 and the Nasdaq both closing about 0.1 per cent lower.

The US dollar advanced in early trade as investors parsed the Fed's January meeting minutes, which said that it may be appropriate to raise rates again "fairly soon" should jobs and inflation data be in line with expectations.

Nonetheless, markets focused on policymakers' uncertainty due to a lack of clarity on President Donald Trump's economic program, and voting members generally saw only a "modest risk"of inflation increasing significantly and believed the Fed would have "ample time" to respond if it did.

"These minutes reflect this mindset of a moderate path. They don't see a smoking gun for them to speed up. There's way too much uncertainty about the content and timing on fiscal stimulus and their impact," said Robert Tipp, chief investment strategist at PGIM Fixed Income.

The dollar edged up slightly to 113.32 yen, after tumbling as much as 0.7 percent on Thursday.

The dollar index, which tracks the greenback against a basket of trade-weighted peers, added almost 0.2 per cent to 101.39.

The euro eased 0.1 per cent to US$1.05495. On Wednesday, it fell below US$1.05 for the first time in six weeks on concern anti European Union candidate Marine Le Pen could win France's presidential election in May.

The common currency closed up 0.2 per cent as the threat of higher US rates eased following the Fed minutes, and on news of the offer of an alliance from veteran centrist Francois Bayrou to independent candidate Emmanuel Macron that could give the latter a boost in the election.

In commodities, oil prices gained in early Asian trade after data from the American Petroleum Institute showed a surprise drop in US crude stocks last week. Official data from the US Department of Energy's Energy Information Administration is expected on Thursday.

US. crude added 0.8 per cent to US$54.02.

The stronger dollar dragged gold lower, with the precious metal slipping 0.1 per cent to US$1,236.90 an ounce.