Most Asian shares gain as investors await Fed meeting

Marco Green
September 25, 2017

Investors will shift their attention to the Fed as the Federal Open Market Committee begins a two-day policy meeting on Tuesday.

US stock futures indicated a 0.2 percent fall for the S&P 500, though markets were showing growing signs of fatigue over the belligerent U.S. Germany's DAX slipped 0.1 percent to 12,541.67.

Investors were also debating any potential market impact from a possible snap election.

The financial markets will also sift through the "dot plot" representing Fed policymakers' rate projections for any hints of a rate hike in December. Hong Kong's Hang Seng was little changed at 28,162.32, while the Shanghai Composite dipped 0.2 percent to 3,355.96.

The three major USA stock indexes edged higher on Tuesday, logging record closes, with financial stocks providing the biggest boost.

"This is likely to give the dollar support going into the end of this week", he said.

"There may be some speculation towards the Fed sounding slightly dovish, but over the last few weeks hawkish rhetoric has come into vogue globally as demonstrated by the Bank of Canada and Bank of England", he said. The move will gradually increase long-term borrowing rates.

In currencies, the Australian dollar was steady at $0.7932 after sliding 1.2 percent the previous day to touch a three-week low of $0.7919.

"The primary reason USA yields are creeping up is after thinking about it clearly, the market has decided that the Fed is unlikely to change the December 2017 dot - still saying they expect one more rate hike in 2017", said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in NY.

Fed fund rate futures are pricing in about 65 per cent chance of a rate hike by December, the highest level since March, and around 50 per cent before the Fed meeting.

Brexit bellwether sterling hovered at a two-month high against the euro, having firmed against both euro and dollar this week as traders anticipated May would strike a softer tone on negotiations for Britain's exit from the EU.

Europe's main stock index recovered from early losses following a sell-off in Asian stocks and a rush to safe-haven currencies after North Korea said it might test a hydrogen bomb in the Pacific Ocean.

Trump said in a speech to the U.N. General Assembly on Tuesday that the United States will be forced to "totally destroy" North Korea unless Pyongyang backs down from its nuclear challenge.

ASIA'S DAY: Japan's Nikkei 225 added 0.1 per cent to 20,310.46 and South Korea's Kospi edged down 0.2 per cent to 2,412.20.

"The market doesn't seem to have any strong risk-off sentiment, even after Trump's comments", said Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo. The euro strengthened to $1.2015 from $1.1996.

France's CAC gained 0.1 per cent to 5,244.17.

The Mexican peso pulled back slightly after dropping in response to a strong natural disaster that struck central Mexico.

In energy markets, oil prices retreated from near-five-month highs ahead of this week's meeting between key oil producers on the outlook for further supply cuts.

US crude futures were steady at $49.91 per barrel, within sight of Thursday's almost four-month high of $50.50.

The yield on two-year US Treasury notes jumped to 1.451 per cent, its highest level since November 2008.

Other reports by Click Lancashire

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