Asia stocks set to end week higher, dollar slides after Fed

Stocks in South Korea and Australia fell. The yield on the 10-year Treasury rose to 2.52% from 2.50% late Wednesday. "The Dutch election result was consistent with the opinion polling, and obviously the Fed has delivered a rate hike, but in its most dovish form", said Bank of America G10 currency strategist Kamal Sharma.

The Fed is hoping to lift rates gradually off their record lows, where they stayed for seven years following the 2008 financial crisis.

Asian investors breathed a sigh of relief on Thursday as fears for faster United States interest rate hikes diminished and political upheaval in Europe failed to materialize.

As yields recovered a little on Thursday, currency traders bought back cautiously into the dollar, with its basket index - which measures it against six major peers - slightly above the one-month low it had hit in the immediate aftermath of the Fed but still down on the day.

FXTM research analyst Lukman Otunuga said: "Gold has staged a sharp rebound this week with prices springing above $1230 after the Federal Reserve signalled a more gradual pace of monetary tightening in 2017 then what markets anticipated".

"We are in the beginning stages of a re-normalization of interest rates", Taylor said. Gold is viewed by many investors as a hedge against rising inflation.

"This meeting has the potential to be more heated so to speak, with some very militant senior members of the new Trump administration in attendance and looking to shake the global trade tree", he said.

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Health care stocks in the S&P 500 dipped, one of only two sectors in the S&P 500 to fall.

EARNINGS POP: Tech giant Oracle jumped 7.1% to $46.12, notching the biggest gain in the S&P 500, after reporting stronger revenue and earnings for its latest quarter than analysts expected. It hit a five-week low on Thursday, and is down nearly 1 percent for the week.

South Korea´s market climbed 0.6 percent, and even Japan´s Nikkei managed a slight rise despite the damage done to exporters by a firmer yen.

Spot gold was up 0.2% at US$1,229.40 an ounce by 2:53 p.m. EDT (1853 GMT), taking this week's gain so far to 2.1%.

Investors had been nervous about Wednesday's Dutch election, where candidates were running on pledges to get the Netherlands out of the European Union and to close borders to migrants from Muslim nations.

Nevertheless, since the start of the year investors have traded French government debt at a heavier discount from ultrasafe German bonds, which means they are still distrustful of polls after last year's decision by Britain to leave the European Union and Donald Trump's victory in the USA, both of which came as a surprise.

U.S. Treasury yields, which slid after the decision, staged a recovery on Thursday and continued to rise on Friday. It was the eighth drop in the last nine days.

  • Rita Burton