Asian stocks fall on Fed interest-rate message

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News,Business,Federal Reserve,Asia,Financial Markets,Interest Rates

TOKYO (AP) — Asian stocks fell Thursday after comments from the new head of the Federal Reserve suggested U.S. interest rates could rise sooner than financial markets were anticipating.

Janet Yellen's comments after the Fed's first policy meeting since she replaced Ben Bernanke sent Wall Street lower and the dollar higher on Wednesday.

The Nikkei 225, the benchmark for the Tokyo stock market, fell 1.7 percent to 14,224.23 and South Korea's Kospi dropped 0.9 percent to 1,919.52.

Hiromichi Tamura, chief strategist at Nomura Securities Co. in Tokyo, said higher U.S. interest rates were expected to come eventually, but there was "a surprise element" in Yellen's remarks.

At a press conference, Yellen implied that the Fed's time frame for raising interest rates was closer to the first half of 2015, sooner than many had expected. The Fed also voted to cut its monthly bond purchases from $65 billion to $55 billion as part of its ongoing winding down of the extraordinary monetary stimulus.

The dollar on Wednesday had its biggest one-day gain since August because of the higher interest rate talk.

The next market-moving factor players are watching in Japan is a consumption tax hike effective April 1. Opinion is divided on whether some stocks will drop as a result of the tax, while others may rise, Tamura said. He believes the effects will be small.

The Dow Jones industrial average lost 114.02 points, or 0.7 percent, to 16,222.17 on Thursday. The Dow fell as much as 209 points before erasing some of its loss. The Standard & Poor's 500 dropped 11.48 points, or 0.6 percent, to 1,860.77 and the Nasdaq composite lost 25.71 points, or 0.6 percent, to 4,307.60.

Benchmark crude for April delivery was up 13 cents at $100.50 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained 67 cents to $100.37 on Wednesday. Most trading has shifted to the May contract as the April contract expires Thursday. Oil for May delivery was up 20 cents to $99.37 a barrel.

The euro rose to $1.3841 from $1.3825 late Wednesday. The dollar fell to 102.30 yen from 102.46 yen.

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Follow Yuri Kageyama on Twitter at twitter.com/yurikageyama

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