Asia stocks produce tentative gains on Fed’s ‘dovish tilt’

Asian shares rose slightly in choppy trade on Thursday as investors attempted to interpret the U.S. Federal Reserve’s statement overnight, and oil prices fell back after climbing in the previous session.

Europe looks set for a negative open, with financial spreadbetters expecting Britain’s FTSE 100 .FTSE Germany’s DAX .GDAXI and France’s CAC 40 .FCHI to start the day about 0.7 percent lower.

After starting weaker, MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS advanced about 0.2 percent.

However, Japan’s Nikkei .N225, which also swung between gains and losses, ended the day down 0.7 percent. Shanghai’s Composite Index .SSEC extended earlier losses to retreat 2.8 percent.

The initial losses in Asian equities followed a poor finish on Wall Street, though dealers noted E-Mini futures for the S&P 500 ESc1 had since rebounded by 0.65 percent.

The Dow .DJI had ended Wednesday with losses of 1.38 percent, while the S&P 500 .SPX fell 1.09 percent and the Nasdaq .IXIC shed 2.18 percent.

Apple’s (AAPL.O) shares fell 6.57 percent after the iPhone maker reported its slowest-ever rise in shipments, while Boeing (BA.N) lost 8.9 percent in its biggest drop since August 2011.

The blame for Wall Street’s fall was laid at the door of the Federal Reserve, with investors apparently frustrated the central bank was not concerned enough about the global outlook to scale back its plans for policy tightening.

Rather, the Fed left all options open, including a hike at the next meeting in March.

“It was clear that the market was initially hoping for more dovish language, which prompted the selloff into the U.S. close,” Angus Nicholson, market analyst at IG, wrote in a note. “However, as cooler heads prevailed and analysis began to circulate, the statement did actually show a noticeable dovish tilt to it.”

A bounce in oil prices also offered some salve to strained nerves in the Asia Pacific region. While Brent crude LCOc1 was off 42 cents at $32.68 a barrel on Thursday, this followed a 4 percent jump on Wednesday after Russia hinted at co-operation with OPEC on oversupply. [O/R]

U.S. crude eased back 43 cents CLc1 to $31.87.

The reaction to the Fed in currency markets was much more muted. The dollar held steady against the safe-haven yen at 118.56 JPY=, while the euro slipped 0.1 percent to $1.0876 EUR=.

Against a basket of currencies, the dollar .DXY edged up 0.2 percent to 99.059.

The New Zealand dollar reversed earlier losses incurred after the Reserve Bank of New Zealand said low inflation meant further policy easing may now be required. Previously, the RBNZ flagged that it would not cut rates further.

The kiwi dollar advanced 0.2 percent to $0.6447 NZD=D4.

There was little in the way of market-moving economic data out of Asia. In Europe, Britain’s fourth-quarter growth data looms large for the embattled pound.

Annual economic growth is expected to have slowed to 1.9 percent, from 2.1 percent, an outcome that could push expectations for a hike in interest rates even further out. Markets are currently pricing in a rate hike in 2017. ECONGB

Sterling was last at $1.4242 GBP=D4, having retreated from this week’s high of $1.4367.

Source: Reuters