Stocks fall as Fed fails to offer fresh cause for cheer

TOKYO (Reuters) – Stocks fell and the dollar advanced on Thursday after the Federal Reserve pledged to keep interest rates low for a long time but stopped short of offering further stimulus to shore up a battered U.S. economy.

European stocks are expected to follow suit, with the futures for the bellwether Euro Stoxx 50 index trading 0.96% lower in early trade.

MSCI’s broadest index of Asia-Pacific shares outside Japan lost 1.01%, running out of steam after five straight days of gains. Japan’s Nikkei shed 0.63%.

U.S. S&P 500 futures fell 1.03% in Asia on Thursday following a 0.46% drop in the S&P 500 on Wall Street.

Tech shares fared worse, with the Nasdaq Composite dropping 1.25% on Wednesday. Nasdaq futures fell 1.14% in Asia.

“In essence, high-tech shares were overbought and we’ve seen a correction since early this month,” said Soichiro Monji, chief strategist at Nishimura Securities in Kyoto. “I think that is still continuing, with the Fed just being a fresh trigger.”

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.”

New economic projections released with the policy statement showed most policymakers see interest rates on hold through to at least 2023, with inflation not breaching 2% over that period.

“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 in Toronto.

“Nevertheless, markets are priced for basically one outcome here and that is little inflation and no hikes for years to come.”

(Graphic: Fed “dot plots”,

Still, with such expectations considered a foregone conclusion by many investors, there was some disappointment in the market.

“By and large the Fed delivered the minimum of what had been

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