Equity trading across Asia was muted early Wednesday on caution before the U.S. Federal Reserve’s policy announcement.
After a solid start to the week, markets were treading water as investors awaited monetary policy guidance from the Federal Open Market Committee. Most investors aren’t expecting interest rates to rise.
Still, “it may not be such a ‘paint-drying’ meeting,” said Rob Carnell, head of Asia research at ING. Many analysts expect the Fed to announce plans to unwind its $4.5 trillion balance sheet at the conclusion of its meeting on Wednesday.
There is uncertainty about the pace of interest rate increases over the next year, analysts say, based on the potential impact of U.S. politics and economic data.
“Any change in the Fed’s intentions are still important market signals, and could be felt in asset prices,” said Carnell.
South Korea’s Kospi
was off 0.1%, showing little reaction to President Donald Trump’s overnight speech at the United Nations in which he threatened to “totally destroy” the Pyongyang regime and called North Korean leader Kim Jong Un “Rocket Man.”
Elsewhere, Japan’s Nikkei Stock Average
was flat, after closing at a two-year high in the previous session, while the Shanghai Composite Index
was down 0.1% and Hong Kong’s Hang Seng Index
Australia’s S&P/ASX 200
was off 0.3% amid weakness in the heavily-weighted financial sector. The country’s big four banks were down between 0.7% and 1%.
In New Zealand, the benchmark NZX-50
was nearly unchanged, ahead of national elections this weekend that many polls suggest were too close to call. Meanwhile, the New Zealand dollar was last up 0.3% against the U.S. dollar.
“If there is no clear winner on Monday — a highly likely scenario — negotiations between coalition partners will continue for the following two weeks, and add to NZD volatility,” said the Commonwealth Bank of Australia in a note.
Oil prices were higher, rebounding on bullish inventory data. Markets were also looking ahead to the big meeting Friday on the production-cut deal led by the Organization of the Petroleum Exporting Countries. November Nymex futures were up 0.8% at $49.86 a barrel, while Brent gained 0.5% to $55.39 a barrel.