Talking Points:
- Asian stocks remained firmly on Federal Reserve watch on Tuesday
- Better industrial production numbers bolstered mainland Chinese stocks
- Weaker business confidence weighed on Australia’s ASX 200 index
Asian stocks were mixed in a cautious Tuesday session, which perhaps isn’t surprising given the proximity of what it expected to be a crucial monetary policy decision from the US Federal Reserve. Wall Street finished in similarly mixed mood on Monday.
The Fed will make its call on Wednesday, and it’s widely expected to raise interest rates for only the third time since the financial crisis hit back in 2008. The Chicago Mercantile Exchange’s “FedWatch” tool has the probability of a move at over 95%.
However higher US rates weren’t the only things on market minds. European political risk also loomed. The UK moved closer to the formal start of its Brexit process on Monday, and it looks as though another referendum on Scottish independence is coming.
The Netherlands goes to the polls on Wednesday, with the far-right anti-EU Party of Freedom expected to do well.
Given all of the above, it’s hardly shocking that investors took some cash off the table. They didn’t do so to any great extent in Tokyo however, with the Nikkei closing down just 0.1% despite an 8% fall for Toshiba. The heavyweight reportedly postponed its earnings filings once again. The Australian benchmark ASX 200 slipped 0.7%, having been on the back foot since early-session when a key survey showed business confidence in retreat, albeit form high levels.
Chinese stocks posted modest gains, helped in part by news that industrial output had beaten expectations in the first two months of this year, even as retail sales missed forecasts. South Korea’s Kospi added 0.6%, with Hyundai engineering rising on reports of a major deal with Iran.
The US Dollar traded modestly higher against a basket of its major rivals while gold prices barely moved. They spent the Asian session hovering around the $1203/ounce area. Crude oil prices reversed some of Monday’s losses with both Brent and US crude just in the green as Asian trade wound down.
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--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
