Global shares wilt, dollar nervous before Fed outcome; Apple outperforms

By Wayne Cole and Hideyuki Sano

SYDNEY/TOKYO (Reuters) – Asian stock markets followed Wall Street into the red on Wednesday, while the dollar was on edge following speculation the Federal Reserve could take a dovish turn in its post-meeting statement later in the session.

Apple Inc provided some relief after the bell as record sales of its iPhone line helped it beat expectations, sending its stock up more than 5 percent, helping to lift U.S. stock futures by 0.3 percent.

But earnings from other majors generally disappointed, with multinationals from DuPont to Microsoft Corp complaining that a strong U.S. dollar was hurting profits.

That left a soggy feel to Asian trade and Australia’s main index <.AXJO> eased 0.2 percent while the Nikkei <.N225> dropped 0.1 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> was off a slim 0.1 percent.

On Wall Street, the Dow <.DJI> ended with losses of 1.65 percent, while the S&P 500 <.SPX> fell 1.34 percent and the Nasdaq <.IXIC> 1.89 percent.

Nine of the 10 primary S&P 500 sectors fell, with tech <.SPLRCT> off 3.3 percent in its biggest one-day drop since November 2011. Shares in Microsoft slid more than 10 percent, while Caterpillar shed 7 percent.

The latest U.S. economic news was mixed with durable goods orders surprisingly soft, but notable strength was seen in housing and consumer sentiment.

Soft business investment and corporate earnings stoked talk the Fed would have to acknowledge the more difficult environment in its policy statement at 1400 GMT.

Further fuelling such expectations, Singapore’s central bank unexpectedly eased policy ahead of its scheduled review, joining a growing list of central banks that took steps to counter disinflation and slowing growth.

So far, the U.S. central bank has stuck by plans to raise interest rates around the middle of 2015, but markets have relentlessly pushed out the timing to year-end and are plotting a much lower trajectory for future hikes.

Fed funds <0#FF:> imply a rate of only 45 basis points by December, compared to the current effective funds rate of 12 basis points.

“The market now thinks a rate hike around June is unlikely. So if the Fed does not change its tone, the market will take it as a bit more hawkish than expected,” said Tomoaki Shishido, fixed income analyst at Nomura Securities.

Just the risk of a dovish turn was enough to force speculators to cut back on crowded short positions in the euro, lifting the common currency to $ 1.1333 and away from Monday’s 11-year low of $ 1.1098.

The dollar dipped to 118.09 yen and retreated against a basket of major currencies to 94.089 <.DXY>, off an 11-year high of 95.481 hit on Friday.

In commodity markets, oil prices were pressured by news U.S. oil stockpiles surged by nearly 13 million barrels last week. [API/S]

Brent crude oil dipped to $ 49.02 a barrel while U.S. crude oil futures slipped to $ 45.50.

(Editing by Shri Navaratnam and Eric Meijer)

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