Asian markets down ahead of Fed decision
HONG KONG, China - Asian markets were mostly in the red on Wednesday, June 19, with focus on the US Federal Reserve's policy meeting later in the trading day.
Tokyo, however, enjoyed another rally as data showed a surge in exports thanks to a weaker yen.
Wall Street again provided a healthy cue, with investors betting the Fed will stop short of reeling in its "quantitative easing" (QE) bond-buying program.
Tokyo added 1.83% or 237.94 points to 13,245.22 and Sydney was 0.98% higher, climbing 47.0 points to 4,861.4.
Bangkok also went up, adding 0.72% or 10.28 points to 1,437.70 and Mumbai closed in the green by 0.12% or 22.42 points to 19,245.70 points.
Asian markets in the negative territory include:
- Seoul: -0.65% or 12.31 points to 1,888.31
- Shanghai: -0.73% or 15.84 points to close at 2,143.45
- Hong Kong: -1.13%, or 238.99 points at 20,986.89
- Taipei: -0.05% or 3.63 points to 8,007.39
- Wellington: -0.37% or 16.55 points to 4,445.55
- Manila: -0.09% or 5.57 points to close at 6,513.20
- Jakarta: -0.70% or 33.80 points at 4,806.66
- Kuala Lumpur: -0.07% or 1.17 points to close at 1,772.88
The US central bank's policy board will announce its decision on QE later Wednesday, with traders hoping it will stick to the $85-billion-a-month buying program, which has sent markets soaring since being unveiled in September 2012.
Global equities and currencies have been sent into turmoil in recent weeks on expectations Fed chief Ben Bernanke will start turning off the tap.
However, IG strategist Stan Shamu told Dow Jones Newswires, "(b)ased on the recent US economic data, Bernanke will probably say that little has changed since last month and that the Fed is happy to continue its quantitative easing."
The market is now betting the Fed will pull back only in "the distant horizon", said Art Hogan of Lazard Capital Markets. Bernanke's message will be "things are getting better, but not enough so that we're going to start tapering".
On Wall Street the Dow climbed 0.91%, the S&P 500 jumped 0.78% and the Nasdaq was 0.87% higher.
Investors in Tokyo welcomed figures showing a 10.1% year on year rise in exports for May as the weaker yen makes Japanese firms' goods more attractive overseas.
The news comes soon after revised data showed the economy expanded at a faster rate than initially thought in the first quarter, adding to improving confidence in the outlook.
While Wednesday's results also showed imports surging 10.1%, they indicate Prime Minister Shinzo Abe's big-spending plan to boost the economy is having an effect.
"It is not just the weaker yen increasing the value of exports, the amount of exports is increasing as well," Junko Nishioka, chief economist at RBS Securities Japan, told Dow Jones Newswires.
"This shows Japanese companies are increasingly in better shape... Their profitability is also rising these days, meaning they are becoming more resilient to potential external shocks," she added.
After enjoying a run-up in morning Tokyo trade, the dollar eased slightly later in the day to sit at 95.05 yen, compared with 95.37 yen in New York late Tuesday, June 18.
The euro fetched $1.3389 and 127.20 yen compared with $1.3396 and 127.76 yen.
Shares in Hong Kong and Shanghai were lower on reports that property tax trials will be launched in China this year in a bid to cap property prices.
There are also fears of a share glut on the mainland caused by another report that a ban on initial public offerings will be lifted next month.
Oil prices were mixed. New York's main contract, light sweet crude for delivery in July, was up 38 cents to $98.82 a barrel and Brent North Sea crude for August delivery added 28 cents to $106.30 in the afternoon.
Gold was at $1,367.80 at 1100 GMT from $1,377.10 late Tuesday. - Rappler.com