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Asian Shares Mostly Lower As Fed Turns Hawkish

Asian stocks ended mostly lower on Thursday and the dollar strengthened after the U.S. Federal Reserve struck a hawkish tone by signaling another rate hike this year.

The Fed also announced that it would begin shrinking its $4.5 trillion balance sheet starting October.

The dollar hit a two-month high versus the yen as Fed officials projected one more 25 bps rate hike by the end of the year and the Bank of Japan maintained the status quo in line with market expectations.

Meanwhile the Organization for Economic Cooperation and Development said in an interim update that global growth momentum has improved and is more broad-based now, but a self-sustained recovery is far from secured as inflation remains subdued and there exists an unmet need for structural reforms.

Chinese shares ended a tad lower as losses in the realty and material sectors overshadowed gains in financials. The benchmark Shanghai Composite index eased 8.18 points or 0.24 percent to 3,357.81 while Hong Kong’s Hang Seng index was marginally lower at 28,120 in late trade.

Japanese shares inched higher as the yen eased on the back of a hawkish Federal Reserve. Investors also heaved a sigh of relief as the Bank of Japan kept its monetary policy steady and maintained its upbeat view of the economy, saying that exports have been on an increasing trend.

The Nikkei average rose 37.02 points or 0.18 percent to 20,347.48 while the broader Topix index closed marginally higher at 1,668.74. Banks Mizuho Financial and Mitsubishi UFJ Financial climbed 1-2 percent on expectations that they would benefit from higher bond yields.

Toshiba shed 1.6 percent after it agreed to sell its memory chip unit to a consortium backed by U.S. private equity giant Bain Capital for $18 billion. Apple supplier Murata Manufacturing tumbled 2.4 percent amid reports that Apple’s new Series 3 smartwatch has connectivity issues.

Australian shares fell sharply to hit three-week lows after the Fed indicated that a third rate hike might be on…

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