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updated: 12/14/2016 8:10 PM

Asian shares extend losses after Fed rate hike, dollar eases

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  • Trader John Romolo works on the floor of the New York Stock Exchange, Wednesday, Dec. 14, 2016. Stocks slipped Wednesday after the Federal Reserve raised interest rates on the back of a strengthening job market and increased its forecast for rate hikes next year.

    Trader John Romolo works on the floor of the New York Stock Exchange, Wednesday, Dec. 14, 2016. Stocks slipped Wednesday after the Federal Reserve raised interest rates on the back of a strengthening job market and increased its forecast for rate hikes next year.
    Associated Press

  • Specialist Jeffrey Berger works at his post on the floor of the New York Stock Exchange as the interest rate decision of the Federal Reserve is announced, Wednesday, Dec. 14, 2016. Stocks were mostly lower in afternoon trading after the Federal Reserve raised its benchmark short-term interest rate, but banks bucked the downward trend and moved higher.

    Specialist Jeffrey Berger works at his post on the floor of the New York Stock Exchange as the interest rate decision of the Federal Reserve is announced, Wednesday, Dec. 14, 2016. Stocks were mostly lower in afternoon trading after the Federal Reserve raised its benchmark short-term interest rate, but banks bucked the downward trend and moved higher.
    Associated Press

  • Specialist Jason Hardzewicz, right, works at his post on the floor of the New York Stock Exchange, Wednesday, Dec. 14, 2016. Stocks are little changed on Wall Street in early trading, a day after indexes set their latest all-time highs.

    Specialist Jason Hardzewicz, right, works at his post on the floor of the New York Stock Exchange, Wednesday, Dec. 14, 2016. Stocks are little changed on Wall Street in early trading, a day after indexes set their latest all-time highs.
    Associated Press

  • Specialist Peter Giacchi, right, calls out prices during the IPO of WildHorse Resource Development on the floor of the New York Stock Exchange, Wednesday, Dec. 14, 2016. Stocks are little changed on Wall Street in early trading, a day after indexes set their latest all-time highs.

    Specialist Peter Giacchi, right, calls out prices during the IPO of WildHorse Resource Development on the floor of the New York Stock Exchange, Wednesday, Dec. 14, 2016. Stocks are little changed on Wall Street in early trading, a day after indexes set their latest all-time highs.
    Associated Press

  • Trader John Panin, right, works on the floor of the New York Stock Exchange, Wednesday, Dec. 14, 2016. Stocks are little changed on Wall Street in early trading, a day after indexes set their latest all-time highs.

    Trader John Panin, right, works on the floor of the New York Stock Exchange, Wednesday, Dec. 14, 2016. Stocks are little changed on Wall Street in early trading, a day after indexes set their latest all-time highs.
    Associated Press

  • Specialist James Denaro, left, and trader David O'Day work on the floor of the New York Stock Exchange, Wednesday, Dec. 14, 2016. Stocks are little changed on Wall Street in early trading, a day after indexes set their latest all-time highs.

    Specialist James Denaro, left, and trader David O'Day work on the floor of the New York Stock Exchange, Wednesday, Dec. 14, 2016. Stocks are little changed on Wall Street in early trading, a day after indexes set their latest all-time highs.
    Associated Press

  • Traders Steven Kaplan, center, and Gregory Rowe, right, work on the floor of the New York Stock Exchange, Wednesday, Dec. 14, 2016. Stocks are little changed on Wall Street in early trading, a day after indexes set their latest all-time highs.

    Traders Steven Kaplan, center, and Gregory Rowe, right, work on the floor of the New York Stock Exchange, Wednesday, Dec. 14, 2016. Stocks are little changed on Wall Street in early trading, a day after indexes set their latest all-time highs.
    Associated Press

  • The logo for Neustar, a provider of real-time information services, appears above a trading post on the floor of the New York Stock Exchange, Wednesday, Dec. 14, 2016.

    The logo for Neustar, a provider of real-time information services, appears above a trading post on the floor of the New York Stock Exchange, Wednesday, Dec. 14, 2016.
    Associated Press

  • Federal Reserve Chair Janet Yellen's news conference in Washington is reflected on a specialist's screen on the floor of the New York Stock Exchange, Wednesday, Dec. 14, 2016. Stocks slipped Wednesday after the Federal Reserve raised interest rates on the back of a strengthening job market and increased its forecast for rate hikes next year.

    Federal Reserve Chair Janet Yellen's news conference in Washington is reflected on a specialist's screen on the floor of the New York Stock Exchange, Wednesday, Dec. 14, 2016. Stocks slipped Wednesday after the Federal Reserve raised interest rates on the back of a strengthening job market and increased its forecast for rate hikes next year.
    Associated Press

 
 

TOKYO -- Share benchmarks in Asia are seeing moderate losses early Thursday, after the Federal Reserve raised interest rates overnight. The quarter percentage point rate increase, the second in a decade, was widely expected although investors were surprised to see the Fed project three more increases for 2017.

KEEPING SCORE: Japan's Nikkei 225 index was the only market to climb early Thursday, gaining 0.2 percent to 19,294.70 after the release of upbeat manufacturing data. Hong Kong's Hang Seng fell 1.1 percent to 22.214.45 and Australia's S&P ASX 200 dropped 0.8 percent to 5,540.70. South Korea's Kospi lost 0.4 percent to 2,028.95 and the Shanghai Composite index fell 0.3 percent to 3,129.95.

FED'S MOVE: The hike took the Fed's key short-term rate to a range of 0.50 percent to 0.75 percent. Investors reacted to the Fed's announcement Wednesday by selling stocks that would be most hurt by higher interest rates, which raise the cost of borrowing and can slow corporate profits and economic growth. The Fed also raised its forecast for rate hikes in 2017 to three from two.

WALL STREET BLUES: Stocks had their worst day in two months after the Fed's announcement, and four stocks fell for every one that rose on the New York Stock Exchange. The Standard & Poor's 500 index fell 18.44 points, or 0.8 percent, to 2,253.28, its biggest percentage loss since mid-October. The Dow Jones industrial average fell 118.68 points, or 0.6 percent, to 19,792.53. The Nasdaq composite fell 27.16, or 0.5 percent, to 5,436.67.

CURRENCIES: The rate hike caused the dollar's value to surge by more than 1 percent against other currencies, but by mid-morning Thursday in Asia, the dollar had fallen back to 117.60 yen from its previous session close of 117.74 yen. The euro was at $1.0505, up from $1.0471.

ANALYST VIEWPOINT: "We will have to watch the price action over the next few days, to see if this was a knee jerk reaction, or the start of another leg of concerted U.S. dollar strength," Jeffrey Halley, senior market analyst at OANDA, said in a commentary.

CURRENCIES: Benchmark U.S. crude fell 18 cents to $50.86 a barrel in electronic trading on the New York Mercantile Exchange. It dropped $1.94 a barrel on Wednesday. Brent crude, the international standard, lost 6 cents to $53.84 a barrel in London.

BOND YIELDS: The yield on the 10-year Treasury note touched its highest level in more than two years and sat at 2.57 percent late Wednesday, up sharply from 2.47 percent a day earlier. Bond yields have been in an upward trend for the last month, and the yield on the two-year Treasury reached its highest level since the summer of 2009. It was trading at 1.27 percent late Wednesday, up from 1.17 percent.

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