An investor watches a board showing stock information at a brokerage office in Beijing, China. Picture: REUTERS/JASON LEE
An investor watches a board showing stock information at a brokerage office in Beijing, China. Picture: REUTERS/JASON LEE

Tokyo — Asian stocks pulled back from a one-month high on Friday as the Federal Reserve appeared poised to deliver another interest rate hike in December, paring gains made earlier this week after US midterm elections triggered a global equities rally.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.1% and was headed for a loss of 1% for the week. On Thursday, the index hit its highest level since October 8.

Australian stocks slipped 0.4%, South Korea’s Kopsi edged down 0.3% and Japan’s Nikkei shed 0.8%.

Hong Kong’s Hang Seng lost 1.9% and the Shanghai Composite Index fell 0.8%.

The Fed held interest rates steady on Thursday but remained on track to continue gradually raising borrowing costs, pointing to healthy economic prospects that were marred only by a dip in the growth of business investment.

The central bank has hiked US interest rates three times so far in 2018 and is widely expected to do so again in December.

The S&P 500 lost 0.25% and the Nasdaq shed 0.53% on Thursday after the Fed’s statement, and energy stocks were the biggest drag on the S&P as US crude oil prices fell.

Wall Street shares spiked midweek following the US midterm elections, on a relief rally as the vote did not deviate significantly from investor expectations.

“The Fed meeting outcome and its statement did not produce major surprises, but it managed to reinforce views that a rate hike is coming in December and this tempered equities,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.

“The Fed statement came after a steep surge in equities and gave the markets an opportunity to sell into the rally.”

In currencies, with treasury yields pushing up, the dollar stood tall after advancing against its peers overnight, buoyed by Fed's largely upbeat economic outlook and its intent to keep tightening monetary policy.

The dollar traded at ¥113.915 after brushing a five-week high of ¥114.09 overnight.

The euro was steady at $1.1357 having shed 0.55% the previous day.

Thanks to the greenback’s gains against the euro and yen, the dollar index against a basket of six major currencies gained 0.75% on Thursday. It last stood little changed at 96.674.

After the Fed statement, the two-year treasury yield rose to 2.977%, the highest in 10-and-a-half years.

Crude oil prices struggled near eight-month lows as investors focused on swelling global crude supply, which is increasing faster than many had expected.

The market took stock of record US crude production and signals from Iraq, Abu Dhabi and Indonesia that output will grow more quickly than expected in 2019.

US crude futures were down 0.15% at $60.58 a barrel after falling to $60.40 the previous day, the lowest since March 14.

Three-month copper on the London Metal Exchange fell 0.5% to $6,124 a ton.

Pressured by a stronger greenback which makes it more costly for non-US buyers of dollar-denominated commodities, copper fell 2.5% this week, poised for its biggest weekly loss since mid-August.