Most markets fell Tuesday as attention turned to the Federal Reserve’s upcoming policy decision. Traders hoped for guidance on its interest rate plans as president-elect Donald Trump prepares for office.
The decision, expected to see officials lower borrowing costs again, comes in a busy week for central banks, with announcements in Japan and Britain also due.
Wall Street ended mostly on the front foot, with a surge in tech giants helping the Nasdaq to a record high, but Asia could not pick up the baton.
Tokyo, Hong Kong, Shanghai, Singapore, Seoul, Taipei, Manila, Mumbai, Bangkok and Jakarta fell, though Sydney and Wellington rose.
London, Paris and Frankfurt dropped at the open.
Bitcoin hit another record high of $107,791 on continued optimism that Trump will introduce measures to deregulate the cryptocurrency market.
Investors are monitoring Beijing after Chinese leaders’ latest measures to kickstart the economy fell short of expectations. Weak retail sales data on Monday reinforced the need for more support.
The Fed is widely expected to lower rates for the third meeting in a row Wednesday as it seeks to guide the world’s top economy to a soft landing. Its statement will be scrutinized for clues about next year’s outlook.
Investors have started paring their bets on how many times it will cut over the next 12 months owing to still-sticky inflation, a strong labour market and uncertainty about Trump, who has pledged to slash taxes and impose tariffs on imports.
Stefan Hofrichter, head of global economics and strategy at Allianz GI, said the US economy had defied warnings of a recession and growth was expected to power ahead, adding the firm’s “base case scenario remains a ‘soft landing’ for the US and world economies”.
However, he added: “The wild card is what happens after Donald Trump takes office as US president. The lavish spending he’s proposed could boost US growth in the short term.
“But the impact of the higher tariffs he’s mooted for US trading partners may also dampen the outlook for Europe. We need to wait to see the extent to which his election campaign promises become policy.”
The Fed rate decision will be followed Thursday by announcements in Japan and Britain.
Opinion is split on whether the Bank of Japan will unveil a third hike of the year — having lifted in March for the first time in 17 years — as officials in Tokyo look to shift the country away from years of ultra-loose policies.
Still, while the BoJ and Fed are on course to bring their rates closer together, the yen is struggling to strengthen and is stuck around 154 per dollar.
– Key figures –
Tokyo – Nikkei 225: DOWN 0.2 per cent at 39,364.68 (close)
Hong Kong – Hang Seng Index: DOWN 0.5 per cent at 19,700.48 (close)
Shanghai – Composite: DOWN 0.7 per cent at 3,361.49 (close)
London – FTSE 100: DOWN 0.5 per cent at 8,217,35
Euro/dollar: DOWN at $1.0500 from $1.0509 Monday
Pound/dollar: UP at $1.2704 from $1.2678
Dollar/yen: DOWN at 153.95 yen from 154.13 yen
Euro/pound: DOWN at 82.67 pence from 82.86 pence
West Texas Intermediate: UP 0.3 per cent at $70.91 per barrel
Brent North Sea Crude: UP 0.4 per cent at $74.17 per barrel
New York – Dow: DOWN 0.3 per cent at 43,717.48 (close)
AFP
