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Asia Markets: China stocks lead declines for Asia as Fed minutes show data may tweak stance

Asia stocks traded mixed, but China led the decliners. Investors were pondering the Fed minutes that indicated incoming data could shift the dovish stance seen across the central bank’s members. Read More...

Asian markets retreated Thursday on news that most U.S. Federal Reserve officials believed the central bank would leave interest rates unchanged for the rest of the year. But several said their views could shift with incoming data.

Japan’s benchmark Nikkei 225 NIK, +0.10%   was flat, while the Kospi SEU, -0.07%  in South Korea gave up 0.1%. Hong Kong’s Hang Seng HSI, -0.70%  was down 0.9% and the Shanghai Composite index SHCOMP, -1.04%  fell 1.3%.

Australia’s S&P ASX 200 XJO, -0.36%  slipped 0.2%. Shares fell in Taiwan and Indonesia but rose in Singapore.

The Federal Open Market Committee (FOMC) released minutes from a meeting in March on Wednesday. There were no major surprises. It showed that most officials believed that the central bank would leave its key policy rate unchanged for the rest of the year.

This was in line with the outcome of the March 19-20 meeting, where the Fed trimmed its 2019 rate hikes outlook from two to none.

In the minutes, several Fed officials also said that they may feel differently, depending on the data that surfaces.

Weaker growth and lower inflation expectations could prompt the Fed to cut rates, while stronger growth and rising inflation expectations could warrant a rate hike.

An indication of flexibility caused Asian markets to open in a “slightly soft mood,” said Selena Ling, chief economist at OCBC Bank.

“The FOMC minutes suggested that rates could head in either direction from here, but members generally favor being patient for the remainder of the year,” she added in an interview.

China reported inflation figures in March on Thursday that met market expectations. The country’s producer price index rose 0.4% in March from a year ago, according to National Bureau of Statistics. This was up from February’s 0.1% increase. Its consumer price index picked up 2.3% in March from a year earlier, as compared to a 1.5% gain in the previous month.

Over on Wall Street, strong gains by technology companies and small-company stocks lifted indexes, while utilities lagged. The broad S&P 500 index SPX, +0.35%  climbed 0.3% to 2,888.21. The Dow Jones Industrial Average DJIA, +0.03%  was less than 0.1% higher at 26,157.16 and the Nasdaq Composite COMP, +0.69%  jumped 0.7% to 7,964.24. The Russell 2000 index RUT, +1.40%   of smaller-company stocks rebounded 1.4% to 1,581.55.

Australia’s prime minister on Thursday called a May 18 election that will be fought on issues including climate change, asylum seekers and economic management. Morrison’s conservative coalition is seeking a third three-year term. But Morrison is the third prime minister to lead a divided government in that time and only took the helm in late August.

Opinion polls suggest his reign will become one of the shortest in the 118-year history of Australian prime ministers on election day. The polls suggest center-left opposition leader Bill Shorten will become the eighth prime minister since the country plunged into an extraordinary period of political

This story was compiled from Associated Press and Dow Jones Newswires reports

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