Asian stock markets followed Wall Street into the red on Wednesday, while the dollar was on edge following speculation the Federal Reserve could take a dovish turn in its post-meeting statement later in the session.

Apple Inc provided some relief after the bell as record sales of its iPhone line helped it beat expectations, sending its stock up more than 5 per cent, helping to lift US stock futures by 0.3 per cent.

But earnings from other majors generally disappointed, with multinationals from DuPont to Microsoft Corp complaining that a strong US dollar was hurting profits.

That left a soggy feel to Asian trade and Australia’s main index eased 0.2 per cent, while the Nikkei dropped 0.1 per cent.

MSCI’s broadest index of Asia-Pacific shares outside Japan was off a slim 0.1 per cent.

On Wall Street, the Dow ended with losses of 1.65 per cent, while the S&P 500 fell 1.34 per cent and the Nasdaq 1.89 per cent.

Nine of the 10 primary S&P 500 sectors fell, with tech off 3.3 per cent in its biggest one-day drop since November 2011. Shares in Microsoft slid more than 10 per cent, while Caterpillar shed 7 per cent.

The latest US economic news was mixed with durable goods orders surprisingly soft, but notable strength was seen in housing and consumer sentiment.

Fed policy stance

Soft business investment and corporate earnings stoked talk that the Fed would have to acknowledge the more difficult environment in its policy statement at 1400 GMT.

Further fuelling such expectations, Singapore’s central bank unexpectedly eased policy ahead of its scheduled review, joining a growing list of central banks that took steps to counter disinflation and slowing growth.

So far, the US central bank has stuck by plans to raise interest rates around the middle of 2015, but markets have relentlessly pushed out the timing to year-end and are plotting a much lower trajectory for future hikes.

Fed funds imply a rate of only 45 basis points by December, compared to the current effective funds rate of 12 basis points.

“The market now thinks a rate hike around June is unlikely. So if the Fed does not change its tone, the market will take it as a bit more hawkish than expected,’’ said Tomoaki Shishido, fixed income analyst at Nomura Securities.

Just the risk of a dovish turn was enough to force speculators to cut back on crowded short positions in the euro, lifting the common currency to $1.1333 and away from Monday's 11-year low of $1.1098.

Dollar vs other currencies

The dollar dipped to 118.09 yen and retreated against a basket of major currencies to 94.089, off an 11-year high of 95.481 hit on Friday.

In commodity markets, oil prices were pressured by news US oil stockpiles surged by nearly 13 million barrels last week.

Brent crude oil dipped to $49.02 a barrel, while US crude oil futures slipped to $45.50.

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