Asia stocks edge up as investors eye Fed rate decision

Silhouettes of passerby are seen as they stand in front of an electric monitor displaying Japan’s Nikkei share average and world stock indexes outside a brokerage in Tokyo, Japan, Oct 21, 2022 REUTERS/Issei Kato/File photo

HONG KONG  – Asian shares rose and bond yields firmed in early trade on Tuesday despite mild losses from Wall Street overnight as investors turned their focus to the Federal Reserve’s policy meeting this week for hints on what comes next.

The central bank is all but certain to raise interest rates by 75 basis points on Wednesday, but investors will look for any signals the Fed may be considering a deceleration in interest rate hikes in the future.

Apart from the Fed’s rate decision, the market will also focus on U.S. jobs data on Friday, Chinese economic activity data this week and the Reserve Bank of Australia’s Tuesday meeting.

“It was a mixed start for risk assets as a big week of central bank decisions gets underway,” said ANZ analysts in a note.

Early in the Asian trading day, MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.7 percent. U.S. stock futures rose 0.2 percent.

Australian shares were up 0.65 percent with the mining index leading the gains, while Japan’s Nikkei stock index rose 0.95 percent.

China’s blue-chip CSI300 index was 0.51 percent higher in early trade. Hong Kong’s Hang Seng index opened up 1.52 percent.

On Monday, U.S. stocks lost ground with the major indexes closing out a strong month of gains on a weaker foot. The Dow Jones Industrial Average fell 0.39 percent, the S&P 500 lost 0.75 percent and the Nasdaq Composite dropped 1.03 percent.

Hopes the Fed may pull back from its aggressive interest rate hike policy have lifted U.S. equities last month with

the Dow jumping 13.95 percent, the S&P climbing 7.99 percent and the Nasdaq advancing 3.9 percent.

The two-year yield, which rises with traders’ expectations of higher Fed fund rates, touched 4.4803 percent compared with a U.S. close of 4.501 percent on Monday. The yield on benchmark 10-year Treasury notes stood at 4.0478 percent compared with its U.S. close of 4.077 percent .

In currencies, the dollar was firm against the struggling Japanese yen to 148.69 yen and rose to $0.98905 per euro early in the Asia session.

On Monday, Japan’s finance ministry said it spent a record $42.8 billion on currency intervention last month to prop up the yen.

In the energy market, oil prices fell as investors expected U.S. production could increase. U.S. crude dipped 0.59 percent to $86.02 a barrel. Brent crude fell to $92.41 per barrel.

Gold was slightly higher. Spot gold was traded at $1633.35 per ounce.