Asian markets mixed ahead of Fed decision
HONG KONG—Asian markets were mixed on Wednesday, with attention turning to the US Federal Reserve’s policy meeting, while Tokyo enjoyed another rally thanks to a weaker yen and data showing a surge in exports.
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 1.25 percent and Sydney was 0.78 percent higher, while Hong Kong slipped 0.90 percent, Shanghai fell 1.10 percent and Seoul lost 0.50 percent.
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.
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, those fears have abated in recent weeks as data indicate the US economy is still not strong enough without the cash.
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 that “things are getting better, but not enough so that we’re going to start tapering”.
On Wall Street the Dow climbed 0.91 percent, the S&P 500 jumped 0.78 percent and the Nasdaq was 0.87 percent higher.
Investors in Tokyo welcomed figures showing a 10.1 percent year on year rise in exports 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 January-March quarter, adding to improving confidence in the outlook.
While Wednesday’s results also showed imports also surging 10.1 percent, 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.
In early Tokyo trade the dollar stood at 95.46 yen against 95.37 yen in New York late Tuesday.
The euro fetched $1.3389 and 127.90 yen compared with $1.3396 and 127.76 yen.
Oil prices were mixed, with New York’s main contract, light sweet crude for delivery in July down four cents to $98.40 a barrel and Brent North Sea crude for August delivery gaining three cents to $106.05 in morning trade.
Gold was at $1,365.80 at 0310 GMT from $1,377.10 late Tuesday.