Asian stocks were mixed on Wednesday after a mixed performance on Wall Street, with investors anxiously awaiting what the Federal Reserve has to say after its much-anticipated policy meeting later in the day.
A key Treasury auction, US jobs data and earnings from some of the world’s biggest companies, including Apple and Amazon, were also under review this week.
All this comes as the crisis surrounding China’s fallen property titan Evergrande casts a shadow and sparks concerns over the world’s number two economy.
While the Dow hit another record in New York, the S&P 500 and Nasdaq reversed course as a rise in U.S. jobs forecasts reinforced views that the labor market remained resilient despite interest rates remaining at two-decade highs .
And while that came with data showing consumer confidence at a two-year high in January and inflation expectations falling, traders are worried the Fed won’t cut borrowing costs as much as expected just a few weeks ago.
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The odds of a March cut are now about one in three, according to Bloomberg News, which added that hopes for continued easing of monetary policy through 2024 are also fading.
The Fed’s guidance last month suggested about three cuts this year, but at one point markets had priced in as many as six.
Bank policymakers are expected to wrap up their latest meeting later on Wednesday, keeping interest rates unchanged, but their statement and comments from boss Jerome Powell will be looked at for clues about their thinking ahead of the meeting. Of March.
Wednesday “could be important for markets as the cross-streams of big-tech earnings, the ADP jobs report, the distribution of Treasury issuance and Powell’s comments come together at a critical juncture,” said Interactive’s Jose Torres. Brokers.
“I expect Powell to take some rate cuts off the table, perhaps even calling current forecasts aggressive.”
Asian shares bounce back after Wall St record, eye on Evergrande impact
And Greg Whiteley at DoubleLine added that the officials’ remarks indicated “there will be room for the Fed to cut rates this year, but it’s not going to happen once the market has priced in.”
The meeting is followed on Friday by the non-farm payrolls report, which provides the clearest guide yet to the strength of the labor market. A reading on private sector hiring is expected later on Wednesday.
Meanwhile, traders are nervously watching developments in the Evergrande saga after a Hong Kong court ordered the property giant to be wound up this week, heightening concerns about China’s economic outlook and raising questions about foreign investment in the country.
The lack of concrete measures from Beijing to address the sharp slowdown in GDP growth is also weighing on investor sentiment, with hopes now hanging on major Communist Party meetings expected next month.
Uncertainty over China continues to weigh on shares in Hong Kong and Shanghai, which fell again on Wednesday, erasing much of last week’s gains.
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Seoul, Wellington, Bangkok and Taipei also fell, although Sydney, Singapore, Manila, Mumbai and Jakarta rose.
Tokyo rose, after reversing early losses that came as a summary of last week’s meeting showed Bank of Japan officials moving to tighten monetary policy as inflation rises and the economy shows some life.
Keys around 0710 GMT
Tokyo – Nikkei 225: UP 0.6 percent at 36,286.71 (close)
Hong Kong – Hang Seng: Down 1.5 percent to 15,463.18
Shanghai Composite: DOWN 1.5 percent at 2,788.55 (close)
Dollar/yen: UP to 147.82 yen from 147.59 yen on Tuesday
EUR/USD: DOWN to $1.0819 from $1.0850
Euro/pound: DOWN to 85.36 pence from 85.41 pence
GBP/USD: DOWN to $1.2673 from $1.2699
West Texas Intermediate: DOWN 0.4% to $77.55 a barrel
Brent North Sea crude: DOWN 0.4% to $82.56 a barrel
New York – Dow: UP 0.4 percent at 38,467.31 (close)
London – FTSE 100: UP 0.4 per cent at 7,666.31 (close)
Source: AFP