Shares in Asia weaker led by Tokyo as BoJ effort to spur prices stalls

Investing.com - The Nikkei fell sharply on Thursday as the central bank's massive policy easing appears to have stalled in its aim to increase overall prices.

The Nikkei 225 fell 2.38% after the Bank of Japan kept policy steady and ahead of further comment on the outlook.

The Hang Seng index also dippled by 0.93%, while the Shanghai Composite fell 0.10% and the S&P/ASX 200 eased 1.22%.

Overnight, stocks on the U.S. equities markets fell broadly on Wednesday, as the Federal Reserve remained cautious on the timing of an interest rate hike following soft GDP data for the first quarter of the year.

The Dow Jones Industrial Average and the NASDAQ Composite index each fell by more than 0.4%, while all but one component on the S&P 500 closed in the red on a bearish day for markets.

Harsh winter weather combined with a strong dollar weighed on the economy in the first quarter, as GDP expanded by 0.2% far below analysts' forecasts of 1% growth. The FOMC, meanwhile, demonstrating that it will take a "data-driven approach," to its first rate hike in nearly a decade said it has removed all calendar references on a period for lift-off. Previously, the FOMC indicated it could start raising its benchmark Fed Funds Rate as early as June.

The Dow lost 0.41% or 74.61 to 18,035.53, while the NASDAQ dropped 31.78 or 0.63% to 5,023.64, as it continued to retreat from near-record levels reached at the end of last week. On the S&P 500, stocks in the Consumer Services, Health Care and Consumer Goods lagged as it fell 0.37% or 7.91 to 2,106.85. Stocks in the energy sector, the only industry to close in the green, led on Wednesday.

The Bank of Japan, as expected, held monetary policy stable on Thursday, but dissent by Takahide Kiuchi was noted int he 8 to 1 vote as he repeated a call to cut the amount of government bonds bought annually by nearly half to ¥45 trillion from ¥80 trillion.

Also in Japan, March preliminary industrial output data showed a drop of 0.3%, less than the 2.3% decline seen.

After the meeting, the BoJ plans to release the board's medium-term GDP and CPI forecasts and risk analysis through the end of fiscal 2017 in its semi-annual Outlook Report at 1500 JST (0600 GMT).

The board's median forecast for core CPI in fiscal 2015 is expected to be revised down to around 0.9% from 1.0% made in January and to around 2.1% from 2.2% for fiscal 2016. This would be followed by BoJ Governor Haruhiko Kuroda's news conference at 1530 (0630 GMT).

In Australia, the RBA's March private sector credit data rose 0.5%, matching expectations, but showing a dip in investor housing loans of a gain of 0.9% from 10.4% in February. The trade price indexes for the first quarter fell 0.2%, well below an expected gain of 2.0%.

Overnight, the Federal Reserve, as expected, kept interest rates at its current level following the conclusion of its Federal Open Market Committee meeting on Wednesday, but offered little hints on the timing of its first rate hike in nearly a decade.

In the FOMC's latest statement, all calendar references have been removed on when the Fed could begin to raise rates. Previously, the Fed indicated that it could start raising rates in June.

In March, the Fed removed a stance of "remaining patient" on policy normalization, a reference which typically indicates that it is ready to raise rates. A raft of soft economic data in recent weeks, however, has ostensibly convinced the U.S. central bank to delay lift-off. On Wednesday, the U.S. Commerce Department announced that GDP for the first quarter expanded by 0.2%, far below analysts' forecasts of 1% growth.

The Fed's acknowledgement of weakness in some sectors of the economy makes it more likely it will not be ready to raise until at least September, which kept stocks from falling further.

Earlier in the day, data showed gross domestic product expanded at an only 0.2 percent annual rate as harsh weather put off shoppers and energy companies cut spending.