Asian shares waiting for clearer view on US interest rates

Asian stocks consolidated recent gains on Wednesday before a US central bank policy meeting that could signal how much monetary tightening to expect during the remainder of the year, with an immediate rate hike fully priced in by markets.

Though recent data, particularly out of China, has fueled a rally in Asian equities since the start of the year, investors are expecting more headwinds for emerging markets due to an in- creasingly hawkish Fed.

“The positive sentiment toward emerging markets is not sustainable as the interest rate differential advantage in Asia’s favor is likely to reduce in the coming months,” said Frances Cheung, head of rates strategy for Asia ex- Japan at Societe Generale in Hong Kong.

Having posted its secondbiggest daily gain this year in the previous session, MSCI’s broadest index of Asia- Pacific shares outside Japan was up 0.1 percent near the day’s highs in cautious trading.

Japan’s benchmark Nikkei average was down 0.14 percent. Index futures in Europe pointed toward a cautious start.

A worrying drop in global oil prices, however, has cast doubt on how much Asian policymakers are likely to raise interest rates this year to maintain their premium over US rates.

Brent crude has lost more than 8 percent in the past five trading sessions despite a 1.2 percent bounce on Wednesday.

US oil prices rose after industry data showed a surprise drawdown in US crude stockpiles. West Texas Intermediate crude was up 1.4 percent at $ 48.40 a barrel.

Policy decisions at the Bank of England and the Japanese central bank were further reasons for investors’ cautious stance.