Asian shares stumble, dollar firms as Fed dampens bets on more rate cuts

Asian shares fell to six-week lows on Thursday while the dollar jumped to two-year highs as the US Federal Reserve poured cold water on market expectations of a lengthy easing cycle following a 25 basis-point rate cut.

MSCI's broadest index of Asia-Pacific shares outside Japan faltered 0.6 percent, extending losses for a fifth day to the lowest since mid-June.

Japan's Nikkei reversed early losses and were a shade higher, while Australian shares declined 0.2 percent. Losses in Chinese shares accelerated after it opened lower with the blue-chip index down 0.8 percent.

E-minis for the S&P500 clawed back early losses and were marginally higher, after a sharp drop on Wall Street.

Global share markets recoiled overnight after US Federal Reserve Chairman Jerome Powell said Wednesday's easing was "not the beginning of a long series of rate cuts".

Powell characterized the rate cut as "a mid-cycle adjustment to policy", citing signs of a global slowdown, simmering US trade tensions and a desire to boost too-low inflation. Markets took that as a sign that sharp further cuts were not imminent.

"We believe the Fed is trying to thread the needle, balancing market jitters about slowing global growth with robust consumer spending and a strong job market in the US," said Nick Maroutsos, co-head of global bonds at Janus Henderson.

"In other words, by cutting just 25 bps, the Fed is trying to bolster market confidence while also keeping some dry powder in reserve in case of an economic shock," he added.

The United States and China on Wednesday ended a brief round of trade talks without much progress in ending their year-long tariff war.