NEW YORK (Reuters) – Asian equities were set to follow Wall Street’s late session retreat on Thursday after the Federal Reserve warned the U.S. economy faced a highly uncertain path to recovery from the coronavirus-induced downturn.

Market sentiment had been bullish up until the Fed’s comments, with the S&P 500 and the Nasdaq hitting all-time highs driven largely by Apple Inc..

The iPhone maker’s shares rose 1.4% to make the first publicly listed U.S. company to reach $2 trillion in market capitalization, with strong results from retailers Target and Lowe’s also lifting sentiment.

“It was a decent day for banks, Apple, and Nike but everything else was in the reverse after the Fed said economic conditions will be difficult for a while,” said Jamie Cox, managing partner at Harris Financial Group.

“We’ve seen some good numbers out of retail but there’s uncertainty that these companies won’t replicate those earnings without some stimulus.”

Wall Street’s downbeat finish gave Asian markets a dour lead with Australian S&P/ASX 200 futures losing 0.25%, Japan’s Nikkei 225 futures down 0.15% and Hong Kong’s Hang Seng index futures off 0.08%.

Cooling Wall Street’s earlier rally were minutes from the Fed’s July meeting, which showed the swift rebound in employment seen in May and June had likely slowed and that additional “substantial improvement” in the labor market would hinge on a “broad and sustained” reopening of business activity.

The readout on Fed discussions provides hints to further action that the U.S. central bank could take in September. No change in interest rate policy is expected until end-2021.

Wall Street stocks retreated and later closed lower on the Fed news. The Dow Jones Industrial Average fell 0.31%, the S&P 500 lost 0.44% and the Nasdaq Composite dropped 0.57%.

“The market seems to want to return to value stocks like pharma and banks but they can’t figure out how,” Cox said.

Despite the dovish minutes, U.S. Treasury yields and the dollar rose with investors focusing on parts of the minutes that showed policymakers downplaying the need for yield caps and targets.

Some investors had hoped the Fed would follow through on a proposed policy to cap yields at a certain level by buying short-term debt, a move that would reinforce the central bank’s guidance for low rates.

The benchmark 10-year Treasury notes last fell 1/32 in price to yield 0.6785%, from 0.675% late on Tuesday.

The 30-year bond last fell 1/32 in price to yield 1.4154%, from 1.415%.

The dollar index, which reflects the greenback’s value against six leading trading currencies, rose 0.88%, with the euro down 0.75% to $1.184. The Japanese yen weakened 0.62% to 106.05 per dollar.

Oil prices edged lower on Wednesday over lingering concerns of weak global fuel demand after data showed that U.S. crude stockpiles fell 1.6 million barrels last week.

Brent crude futures fell 0.55% to $45.21 a barrel. U.S. crude futures slid 0.33% to $42.79 a barrel.

Reporting by Chibuike Oguh in New York; Editing by Sam Holmes

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