Economy

Asian shares slip as investors await Fed meeting for rate clues

Asian shares slip as investors await Fed meeting for rate clues”

The three major USA stock indexes edged higher on Tuesday, logging closing records, with financial stocks providing the biggest boost a day ahead of the Federal Reserve's concluding statement from its two-day policy meeting.

Financial stocks benefited from a rising U.S. Treasury yields, with the yield on benchmark 10-year notes at 2.222 percent.

Tuesday marked the start of a two-day meeting of the USA central bank.

The Fed's FOMC meeting begins Tuesday and will conclude Wednesday, Sept. 20, with an announcement on interest rates and a press conference led by chairwoman Janet Yellen.

If the focus is on the repurchase of short-term assets, that would likely push the long end of the yield curve higher, driving investors' attention also to shares of banks, which would theoretically make more money with the help of higher net interest margins, said Mr. Morganlander.

"The meeting was definitely more hawkish than what the market was anticipating", said Mary Ann Hurley, vice president in fixed income trading at D.A. Davidson in Seattle.

However, analysts were unsure about any further increases this year with inflation remaining subdued -apart from a bigger-than-expected jump in August-and other indicators still soft.

Fed policymakers made a decision to leave the central bank's short-term benchmark interest rate between 1 percent and 1.25 percent, but also said they still expect to increase the rate one more time this year and three times in 2018, if persistently low inflation rebounds. Income-seeking investors find those stocks less appealing when bond yields move higher. During the previous times, the general risk sentiment added to the North Korean risks as well and had the markets spooked but as the time goes on, the threat from North Korea has less of an effect though it refuses to go away.

In emerging markets, the Mexican peso fell 0.3 percent to 17.8125 peso per USA dollar following reports of extensive damage to buildings in Mexico City in the aftermath of the second major natural disaster that rocked that country in less than two weeks.

Bed Bath and Beyond plunged 15.9 percent after the home goods retailer reported that its latest quarterly sales at stores open at least a year, a key metric for retailers, fell short of analysts' forecasts.

The futures market implied traders saw a 58 percent chance of a rate increase at year-end, CME Group's FedWatch showed. On a day of scant local economic news the ASX, Hang Seng and Kospi were essentially flat with all of them technically in the red by less than 0.1%.

"As that balance sheet drops, that's potentially going to leave us with higher long-term rates".

Japan's Nikkei stock index surged 1.5 percent, catching up to global equities gains and responding to a weaker yen as Tokyo markets reopened after a public holiday on Monday.

About 5.8 billion shares changed hands on USA exchanges.

Meanwhile crude oil prices were steady, reportedly as worries about lower Saudi output were offset by prognoses of higher U.S. shale production.



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