Dollar and stocks gain as Fed charts ‘soft landing’ path.

By Tom Westbrook

SINGAPORE (Reuters) – The dollar rebounded, long-term bond yields rose and Asian shares rose after the U.S. Federal Reserve announced a 50 basis point interest rate cut and signaled its easing cycle would be measured.

The S&P 500 hit a record high overnight, and although it closed slightly lower, futures rose 0.67% on the Asian day. Nasdaq futures rose 1%. Japan’s Nikkei rose 2.5 percent, and stock markets in Australia and Indonesia hit record highs.

The Fed cut its benchmark policy rate window by 50 basis points to 4.75-5% as traders balked ahead of the decision. The dollar immediately hit a two-and-a-half-year low against the pound, but then bounced back sharply.(FRX/)

It rose nearly 1 percent to 143.55 yen early Thursday and the euro hit a low of $1.1097.

Ten-year Treasury yields rose nearly eight basis points from a day earlier to 3.719%, while gold hit a record high of just $2,600 an ounce before easing back to $2,559 . (US/)(GOL/)

The Fed’s tapering is expected to support spending and the US economy and encourage other central banks to cut rates.

“The key is never going to be around 25 or 50, it’s all about the way forward and I think they’ve outlined a view where the economy is still doing quite well,” BNZ strategist Jason Wong said in Wellington. “This was not a panicked 50 (bp) cut.”

Policymakers adjusted their average rate projection downwards, compared to their July outlook, but Fed Chairman Jerome Powell emphasized flexibility.

“I don’t think anybody should look at this and say, oh, this is the new pace,” Powell told reporters after the huge cut was announced.

“We are recalibrating politics over time to a more neutral level. And we are moving at the pace we consider appropriate, given the developments in the economy”.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3 percent. Hong Kong and China posted broad gains on the view that Beijing is more likely to launch stimulus now that the Fed has moved.

Chinese bond yields fell.

South Korean markets returned from vacation with a bang after a downbeat Morgan Stanley note that halved SK Hynix’s price target prompted a sell-off in chip stocks. Shares in SK Hynix fell 8.7 percent and Samsung fell 3.1 percent.

Oil prices fell, with benchmark Brent crude futures last down 0.3 percent at $73.42 a barrel. (OR)

In the region, lower US rates theoretically give emerging markets leeway to cut policy rates to support growth. Bank Indonesia moved hours ahead of the Fed, cutting 25 basis points on Wednesday.

The story continues

The Bank of England meets later on Thursday and is seen keeping rates at 5%, especially after inflation figures showed services inflation rose in August. The Bank of Japan sets policy on Friday and is expected to hold off but align future hikes, perhaps as soon as October.

(Editing by Shri Navaratnam and Edwina Gibbs)