Nikkei gains steam, outpacing other Asian markets

Asian stocks were split early on whether to rise or fall in the wake of the Federal Reserve’s overnight statements on policy and economic projections.

Japan was again a standout, with equities building on this week’s two-year highs as the yen continued to retreat. Meanwhile, Australia underperformed as metal prices fell and utilities stocks slid.

The Nikkei

NIK, +0.83%

  was recently up 0.7%, putting it just 2% away from hitting levels last seen in 1996. The yen has dropped to ¥112.50 per dollar

JPYUSD, -0.200119%

 , a full yen weaker than where it was when Japan stock trading ended Wednesday.

Later today, the Bank of Japan is expected to make no policy changes at its monthly meeting.

Insurance companies and exporters continued to gain due to the weaker yen and rising bond yields. Many financial stocks were up 2% and auto makers gained at least 1%.

In Australia, the S&P/ASX 200

XJO, -1.00%

  was recently down 0.7%; some mining companies fell more than 1% as a stronger U.S. dollar depressed metal prices. In addition, utilities stocks fell 1.7%, nearing 2017 lows.

Meanwhile, there is some concern that the Fed is doing more to contain financial risk than get inflation higher, said IG Markets strategist Chris Weston. He noted that could prompt Australia’s central bank to take the same view, considering the country’s high levels of household debt.

U.S. stocks had little reaction to news from the Fed, which still expects a third rate rise this year and three more in 2018.

On Thursday in Asia, China

SHCOMP, +0.17%

  and Korea

SEU, -0.13%

  logged small early declines while Taiwan

Y9999, +0.63%

  and Hong Kong

HSI, +0.12%

  rose slightly.

Still, “going into the meeting, investors may have expected a more dovish outcome — especially on the interest rate projections,” said Steven Friedman, a senior economist at BNP Paribas Asset Management.

Despite leaving rates unchanged, the U.S. central bank sounded optimistic about the economy, even as persistently low inflation prompted some officials to voice greater skepticism about another rate move this year.

Gold fell about 1% on the Fed news and oil futures in Asia were little changed. They jumped nearly 2% overnight. Japan Petroleum

1662, +3.37%

  rose 3% and Australia’s Santos

STO, +2.17%

  gained 2%.

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