Asian markets await US Fed decision on stimulus

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HONG KONG: Asian markets were mixed on Tuesday, with Wall Street providing a soft lead, as traders await a US Federal Reserve policy meeting for clues about its plans for its stimulus program.

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The dollar also moved in a tight range against the yen and euro, as investors hold off making any big bets before the bank’s board decision.

Tokyo eased 0.49 percent or 70.06 points to 14,325.98, with profit-takers also moving in after a healthy rally on Monday, while Sydney ended 0.48 percent or 25.9 points lower at 5,415.5. But Seoul closed 0.18 percent higher, adding 3.62 points to 2,051.76.

In late afternoon trade, Shanghai was off 0.64 percent and Hong Kong was up 0.21 percent.

While analysts widely expect the Federal Open Market Committee (FOMC) to keep its $85-billion-a-month stimulus in place, they will be poring over Wednesday’s announcement for an idea as to when it will start winding the program down.

The bank had been expected to begin tapering by the end of this year but a weak set of data—including soft jobs growth—and this month’s two-week government shutdown has made that highly unlikely. Most traders expect a reduction in bond-buying to begin early next year.

“Nothing news-breaking out of the Fed is really expected, but overseas players are reticent to trade, nonetheless, before the central bank speaks and also before the earnings season peak on Wednesday toThursday,” an equity trading director at a foreign brokerage in Japan told Dow Jones Newswires.

The likelihood of the wind-down being put off increased on Monday, with disappointing US pending home sales numbers.

Wall Street ended broadly flat ahead of the policy meeting, with the Dow and Nasdaq virtually unchanged, but the S&P 500 tacked on 0.13 percent to hit a new all-time high.

In currency trading the dollar, which has been weighed by expectations the stimulus would stay in place for now, held its own in afternoon Tokyo trade.

It bought 97.55 yen against 97.66 yen in New York City on Monday, while the euro fetched $1.3782 and 134.45 yen compared with $1.3787 and 134.67 yen.

The Fed’s bond-buying scheme floods financial markets with dollars to keep interest rates down, which in turn keeps a lid on demand for the unit.

AFP

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