* Dollar holds gains made after Fed downplayed slower 1Q
* Chances of Fed rate hike in June jump to 72 percent
* European markets expected to open higher
* Asia stocks lower, after subdued Wall Street, Europe
* U.S. House expected to vote on Obamacare repeal bill on
* Oil slips on smaller-than-expected U.S. inventory decline
By Nichola Saminather
SINGAPORE, May 4 Asian stocks retreated on
Thursday, taking their cues from a subdued session on Wall
Street, while the dollar retained gains made after the Federal
Reserve's hawkish policy statement.
European markets looked more positive, with financial
spreadbetters expecting Britain's FTSE 100 and Germany's
DAX to open 0.2 percent higher and France's CAC 40
to start the day up 0.1 percent.
At the end of its two-day meeting, the Fed kept its
benchmark interest rate steady, as expected, but downplayed weak
first-quarter economic growth and emphasised the strength of the
labour market, a sign it was still on track for two more rate
increases this year.
Futures traders are now pricing in a 72 percent chance of a
June rate hike, from 63 percent before the Fed's statement,
according to the CME Group's FedWatch Tool.
The dollar stood at 112.765 yen, slightly higher than
Wednesday and at its strongest level since March 20.
The dollar index, which tracks the greenback against
a basket of trade-weighted peers, climbed 0.1 percent to 99.309,
building on Wednesday's 0.2 percent jump.
"The key over the coming weeks will be the economic data
from the U.S. but, in addition, the (Fed) will be closely
watching Washington and negotiations surrounding the new
administration’s tax cut plans," said Lee Ferridge, head of
multi-asset strategy for North America at State Street Global
"Should the data hold up (or better still, improve from
here), while the chances of a late summer tax cut agreement
remain intact, then the market will likely price in a June
Attention now turns to U.S. non-farm payrolls for March, due
on Friday, after separate data showed private employers added
177,000 jobs in April. That was higher than expected but the
smallest increase since October.
Economists polled by Reuters expect U.S. private payroll
employment likely grew by 185,000 jobs in April, up from 89,000
MSCI's broadest index of Asia-Pacific shares outside Japan
slid 0.4 percent on Thursday, dragged lower by
commodities, energy and financials stocks.
Japan is closed for the Golden Week holiday.
Chinese stocks pared earlier losses to trade flat,
as gains in small-caps offset a cooling in China's services
sector growth to its slowest in almost a year in April as fears
of slower economic growth dented business confidence.
Hong Kong's Hang Seng dropped 0.4 percent.
Australian shares were also 0.4 percent lower.
"May is a notoriously cruel month for Asia with foreign
exchange, equities and domestic bonds all losing in historical
average returns," Bank of America Merrill Lynch strategists led
by Claudio Piron wrote in a note.
South Korea's KOSPI bucked the weaker trend, jumping
0.7 percent and hovering just a touch below an all-time high hit
earlier in the session on strong corporate earnings.
Rising exports point to continued profit growth in the
second quarter, with sentiment supported by hopes for economic
stimulus from a new president.
Overnight, Wall Street closed flat to lower.
The Nasdaq fell 0.4 percent as Apple shares slid
after reporting lower than expected iPhone sales on Tuesday.
Facebook and Tesla also dropped during the
session and after hours despite upbeat quarterly results, also
weighed on the index.
Political concerns, which have taken a backseat recently,
may re-emerge, with a U.S. House of Representatives vote on a
revised bill to repeal Obamacare due later in the session after
two failed attempts to corral enough support to pass the
House Majority Leader Kevin McCarthy said Republican
leadership is confident there is enough backing for the bill to
pass, after key moderate leaders met with President Donald Trump
on Wednesday. Even if the bill passes the House, it could face
an uphill battle in the Senate.
In Europe, Germany ended higher but Britain
and France closed lower on Wednesday. The pan-European
STOXX 600 index lost 0.04 percent to slip from a
The euro ticked up 0.1 percent to $1.08945 on
Thursday, after losing 0.4 percent on Wednesday as the dollar
strengthened on the Fed's statement.
Following a debate between French far-right leader Marine Le
Pen and centrist Emmanuel Macron, who will face off in the
second round of the presidential election on Sunday, a poll
showed some 63 percent of voters found market favourite Macron
to be more convincing.
In commodities, oil prices slipped on Thursday after a
smaller-than-expected decline in U.S. inventories last week.
U.S. crude pulled back 0.25 percent to $47.69 a
barrel. On Wednesday, it touched its lowest level in over five
weeks before closing higher.
Global benchmark Brent fell 0.2 percent to $50.70.
Gold inched up 0.1 percent to $1,239.80 an ounce,
making up some of Wednesday's 1.5 percent loss.
(Reporting by Nichola Saminather; Editing by Sam Holmes & Simon