Asian stock markets mostly down after Federal Reserve cuts US growth forecast

MarketsAssociated Press

Asian stock markets were mostly lower Thursday after the Federal Reserve cuts its forecast for U.S. economic growth, a move that could delay Fed rate hikes but also suggests reduced American demand for Asia's exports.

KEEPING SCORE: Tokyo's Nikkei 225 fell 1.1 percent to 19,990.82 and Hong Kong's Hang Seng was down 0.3 percent to 26,663.65. Australia's S&P/ASX 200 was down 1.3 percent to 5,524.90. South Korea's Kospi outperformed the region, rising 0.3 percent to 2,041.88. Stocks in mainland China and Singapore declined.

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THE FED: The Federal Reserve left interest rates unchanged as expected and said in a statement after its latest policy meeting that it wants to see further economic gains and higher inflation before raising interest rates from record lows. The policymakers, while noting a strengthening U.S. economy, sharply lowered their estimate of growth this year, from a range of 2.3 percent to 2.7 percent estimated in March to a range of 1.8 percent to 2 percent. The downgrade reflects the economy's contraction in the January-march quarter, which resulted in part from a brutal winter.

ANALYST'S TAKE: "While the decision not to raise interest rates this time was as expected, the decision to cut its GDP forecast for the second time in a row suggested to the markets that U.S. economic growth is still less than expected," Nicholas Teo, an analyst at CMC Markets, said in a commentary. "This cut in the GDP forecast pretty much rules out an interest rate hike in July and makes September unlikely unless the economy turns around in a big way soon."

WALL STREET: Stocks edged higher Wednesday. The Dow Jones industrial average gained 0.2 percent to 17,935.74. The Standard & Poor's 500 rose 0.2 percent to 2,100.44. The Nasdaq composite added 0.2 percent to 5,064.88.

ENERGY: Benchmark U.S. crude fell 47 cents to $59.45 per barrel in electronic trading on the New York Mercantile Exchange. The contract closed up 5 cents at $59.92 per barrel in New York on Wednesday. Brent crude, a benchmark for international oil, declined 12 cents to $63.75 in London.

CURRENCIES: The dollar weakened to 122.99 yen from 123.58 yen on Wednesday. The euro strengthened slightly to $1.1361 from $1.1350.