Asian stocks mark time, waiting for clearer view on US rates
HONG KONG: 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 fuelled a rally in Asian equities since the start of the year, investors are expecting more headwinds for emerging markets due to an increasingly hawkish Fed.
“The positive sentiment towards emerging markets is not sustainable as the interest rate differential advantage in Asia’s favour 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 per cent near the day’s highs in cautious trading.
Japan’s benchmark Nikkei average was down 0.14 per cent while stocks in mainland China and Korea declined 0.13 and 0.2 per cent respectively. Index futures in Europe pointed towards a cautious start.
Asian share markets have had a good start to the week thanks to positive news out of the region’s two economic powerhouses, China and India.
Strong data out of China this week have sparked a fresh rally in Hong Kong stocks, while Indian shares climbed to a record high on Tuesday as investors regarded Prime Minister Narendra Modi’s landslide victory in the northern state of Uttar Pradesh as an endorsement for his economic reforms. — Reuters