Talking Points:
- Asian stocks marked time on Wednesday, with most slipping into the red by a few points
- This was entirely predictable given the proximity of the Federal Reserve’s policy call
- Local data was quite upbeat but not that many noticed
Asian stocks didn’t move far Wednesday. Perhaps they were never likely to with a Federal Reserve policy announcement due later in the global day.
The US central bank is expected to raise interest rates – that’s now fully priced by futures markets. Assuming Chair Janet Yellen and Co. stick to this script, any steer the Fed gives as to how many more rises there might be by the end of the year may be more important than the well-flagged rise itself.
There are also policy decisions coming up from the Bank of Japan and the Bank of England in the next 24 hours, along with the Dutch election which gets under way Wednesday. Given all of the above, caution reigned.
The Nikkei 225 ended down just over 0.1%. Toshiba shares plunged again as regulators are reportedly considering its delisting following the postponement of earnings releases. Mainland Chinese and Hong Kong stocks were about flat, while Australia’s ASX managed small gains. Its energy sector was back on song thanks to crude oil prices’ Tuesday rise which came on a surprise drawdown in US stockpiles.
Local data was quite upbeat through the session, not that Fed-obsessed markets paid very much attention. New Zealand’s current account deficit shrank notably in the last quarter of 2016, to lows not seen for more than two years. Japan’s industrial production for January was revised up, but still posted its first on-month loss in six.
The US Dollar edged up a little against major rivals through the Asian session, although recent trading ranges went unthreatened. Gold prices managed modest rises. Although higher US rates might not be great for non-yielding precious metals, European political risk stemming from various elections and ongoing Brexit news-flow is reportedly keeping buyers interested.
The rest of global Wednesday will offer investors snapshots of the UK labor market, US retail sales, consumer prices and oil inventories. But of course that Fed decision is the only real game in (any) town, and it’s coming up at 18:00 GMT.
We’re near the first quarter’s end. How are DailyFX analysts’ forecasts bearing up?
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
