Global Markets: Asian shares set for mostly weaker open after Fed

Global Markets: Asian shares were set to drift lower on Thursday as concerns about the strength of the recovery from the COVID-19 pandemic remained, even after the U.S. Federal Reserve pledged to hold interest rates near zero until at least 2023. Australian S&P/ASX 200 futures lost 0.22% in early trading. Japan`s Nikkei 225 futures were flat, while Hong Kong`s Hang Seng index futures lost 0.15%. E-mini futures for the S&P 500 rose 0.47%.

The Fed said it would keep interest rates near zero until inflation is on track to "moderately exceed" the central bank`s 2% inflation target "for some time," with the aim of offsetting years of weak inflation and allowing the economy to add jobs for as long as possible. The median forecast of Fed policy makers is for rates to stay near zero through 2023.

"Of course, sensible people wouldn`t really hold anyone to macro forecasts that far out so we`ll cross that bridge when we get to it," said Derek Holt, head of capital markets economics at Scotiabank. "Nevertheless, markets are priced for basically one outcome here and that is little inflation and no hikes for years to come."

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U.S. shares rose with the Fed`s statement, which came after a two-day policy meeting, but then reversed gains as Fed Chairman Jerome Powell spoke afterward.

The economic recovery is ongoing but the pace is expected to slow, requiring continued support from the Fed and from further government spending, Powell said.

U.S. lawmakers have been at an impasse for months over a new stimulus package.

"We see a risk that economic activity slows in the absence of more fiscal stimulus," Joseph Capurso, head of international economics at Commonwealth Bank of Australia, said in a note.

U.S. data showed that at least one key driver of the U.S. economy was already slowing, with retail sales pulling back in August as extended unemployment benefits were cut for millions of Americans.

The S&P 500 fell 0.46% and the Nasdaq Composite dropped 1.25%, with technology shares leading the decline.

MSCI`s benchmark for global equity markets fell 0.17% to 574.65.

Longer-term U.S. Treasury yields and gold prices edged higher after the Fed.

The Bank of Japan is set to keep monetary policy steady on Thursday and stress its readiness to work closely with the new government led by Yoshihide Suga, who has vowed to do whatever it takes to ease the economic blow from the coronavirus. 

Investors will focus on what BOJ Governor Haruhiko Kuroda says at his post-meeting briefing on how the central bank will work with the new government to underpin the economy with its dwindling policy tool-kit.

The Japanese yen rose overnight and extended gains that hit a nearly seven-week high of 104.995 to the dollar as investors sought safer assets, before slipping back to 104.97 per dollar.

The Australian dollar fell 0.05% versus the greenback to $0.730.