* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Asia subdued, strong retail earnings lift Wall St
* Fed minutes show division on rate cuts
* Trump says no longer looking at tax cuts
* PMI surveys, ECB minutes due Thursday
By Wayne Cole
SYDNEY, Aug 22 (Reuters) - Asian shares went flat on
Thursday as uncertainty over the outlook for both U.S. interest
rates and the chance of global fiscal stimulus sucked the life
out of markets.
Moves were miniscule, with MSCI's broadest index of
Asia-Pacific shares outside Japan .MIAPJ0000PUS off 0.2% in
very light volumes.
Japan's Nikkei .N225 added 0.1%, as did Shanghai blue
chips .CSI300 . E-Mini futures for the S&P 500 ESc1 dipped
0.04%, while EUROSTOXX 50 futures STXEc1 eased 0.09%.
Wall Street had been saved by surprisingly upbeat results
from retailers, which sent Target Corp (NYSE:TGT) TGT.N surging 20% and
Lowe's Cos Inc LOW.N up 10%
The Dow .DJI ended Wednesday up 0.93%, while the S&P 500
.SPX rose 0.82% and the Nasdaq .IXIC 0.90%. .N
Less welcome were minutes of the Federal Reserve's July
meeting, which showed policymakers deeply divided over whether
to cut interest rates, but united in wanting to signal they were
not on a preset path to more easing. Indeed, while a "couple" of Fed members favoured a deeper
cut of half a point, "several" favoured no change at all.
That reluctance did not seem to gel with the market's
aggressive pricing for more than 100 basis points of easing by
the end of 2020. FEDWATCH
Treasuries were sold in response and two-year yields
US2YT=RR were left at 1.58%, compared with last week's low of
1.467%. US/
"The key message from the Fed minutes is that the 25
basis-point cut in July was just a calibration, a mid cycle
adjustment and not the start of a new easing cycle," said
Rodrigo Catril, a senior FX strategist at National Australia
Bank.
Hopes for U.S. fiscal stimulus also got a knock when
President Donald Trump reversed course and said he was not
looking at cutting payroll taxes. POWELL
Much now depends on how dovish Fed Chair Jerome Powell
chooses to be in his Jackson Hole speech on Friday.
"The most sensitive comments will revolve around whether
Powell is willing to reaffirm a view that the easing cycle is a
'mid-cycle adjustment' or align more closely to market
thinking," said Alan Ruskin, macro strategist at Deutsche Bank (DE:DBKGn).
"If he sticks to the old language as is most likely, it
would affirm that he is still confident that the strength of
consumption, in combination with modest Fed easing, will be
sufficient to keep the recovery broadly on track."
That would be more hawkish than expected and would likely
lift the dollar further, he said.
The dollar had already bounced overnight, and was last at
98.247 against a basket of currencies .DXY from a low of
97.948. It also reached 106.50 yen JPY= from Wednesday's
trough of 106.21.
The euro edged back to $1.1089 EUR= from a top of $1.1107,
not helped by a gloomy economic outlook from Germany's finance
ministry. A range of manufacturing surveys from across the globe are
due later on Thursday and risks are they will show a further
slowdown in activity, especially in Europe.
Japan's flash PMI showed factories and exports remained
subdued in July, though service activity expanded at the fastest
pace in almost two years. Also due are minutes from the European Central Bank's last
policy meeting and markets are looking for more detail on
exactly when and how aggressively it might ease policy.
In commodity markets, spot gold drifted off to $1,501.50
XAU= .
Oil prices firmed after U.S. government data showed a
drawdown in domestic crude stocks. O/R
Brent crude LCOc1 futures rose 2 cents to $60.32, while
U.S. crude CLc1 gained 7 cents to $55.75 a barrel.
Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
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(Editing by Shri Navaratnam and Richard Borsuk)