Asian Stocks Talking Points:
- Local bourses were mixed with the Nikkei lagging
- Investors are watching trade talks in Washington and this month’s US monetary policy call
- The US Dollar was steady, although the Aussie gained on modest signs of life from domestic inflation
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Asia-Pacific equity markets put in mixed performances on Wednesday as investors looked forward to the start of high-level trade talks between China and the US and to the US Federal Reserve’s January monetary policy decision which will be made in the early hours of Thursday local time.
Apple CEO Tim Cook told CNBC on Tuesday that he felt a little more trade optimism in the air.
Meanwhile the Fed is not expected to raise interest rates again anytime soon and may yet again stress the data-dependency of any further moves. A more dovish tone may well support stock markets worldwide, as it so often has in the post-crisis era.
While we wait the Nikkei was down by 0.3% as its close approached. It was the only mainboard flashing red however. Shanghai was up by 0.1%, the Hang Seng had added 0.3% and the ASX 200 was 0.1% higher.
The Australian Dollar rose earlier on news that consumer price inflation in its home country had risen a little more than expected in the old year’s final quarter. However, it remains well below the Reserve Bank of Australia’s 2-3% target band and the current environment certainly doesn’t suggest that record-low Australian interest rates will be rising anytime soon. Indeed futures markets continue to edge toward pricing-in further cuts.
The US Dollar was broadly steady as markets eyed the Fed, but the UK Pound continued to slip thanks to yet more Brexit turmoil. Lawmakers in London fought shy of a proposed amendment which would have ruled out leaving the EU without a deal.
GBP/USD has risen this month on hopes that such a Brexit would be taken off the table. While it remains far from certain that the UK will indeed ’crash out’ of the EU, the lack of certainty here has seen the Pound falter at mid-October’s peaks.
Gold prices rose, lifted by hopes that US interest rates will indeed rise more slowly this year. Crude oil prices were boosted by US sanctions against Venezuelan exports.
There’s plenty left on Wednesday’s economic data schedule for investors to wade through before they get to that Fed policy call. German inflation figures are coming up, as are Gross Domestic Product releases from the US, Mexico and France. Germany’s Gfk confidence barometer is also due.
It’s fair to say thought that they’ll all have to be widely different from forecasts to move markets much before the Fed.
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--- Written by David Cottle, DailyFX Research
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