Asian stocks rise ahead of key US Federal Reserve decision on interest rates

A pedestrian holding an umbrella looks at an electronic stock board outside a securities firm in Tokyo, Japan.
A pedestrian holding an umbrella looks at an electronic stock board outside a securities firm in Tokyo, Japan.PHOTO: BLOOMBERG

WELLINGTON (Bloomberg) - Asian stocks advanced on Thursday (Sept 17) as a rebound in the price of oil-fuelled commodity company gains with less than 24 hours until the most anticipated US Federal Reserve decision of the year.

Japanese shares drove the regional benchmark up for a second day, as equities followed advances in the United States and Europe. US crude extended gains above US$47 (S$65.70) a barrel after a drop in American stockpiles soothed concern over the global glut.

The US dollar slipped against emerging-market peers, while weaker-than-expected growth data sank. New Zealand's currency. Copper rose after a powerful earthquake hit Chile, the No. 1 producer of the metal.

"It's hard to recall an event given so much attention from market players, the implications are far reaching and history provides absolutely no guide," Chris Weston, chief markets strategist in Melbourne at IG Ltd, said in an e-mail to clients.

"Price action in European and US equity markets suggests no one wants to be left behind if the Federal Reserve announces something risk friendly."

Economists and traders remain split on whether the Fed will pull the trigger on a rate hike on Thursday, with futures putting the odds at 28 per cent, while 54 of 111 analysts surveyed by Bloomberg predict some kind of increase.

The lack of a strong consensus leaves financial markets vulnerable, according to Goldman Sachs Group. Bets were in favour of a September rate increase until mid-August, when China jolted investors with its unexpected currency devaluation. A surge in Chinese stocks on Wednesday burnished global sentiment.

The MSCI Asia-Pacific Index added 0.8 per cent by 9.20am in Tokyo, with Japan's Topix index climbing 1.2 per cent. Futures on the Standard & Poor's 500 Index slipped 0.1 per cent after a 0.9 per cent gain in the US gauge.

In Singapore, at about 9.15am, the Straits Times Index had risen 0.96 per cent or 27.4 points to 2,896.14.

The Bloomberg Dollar Spot Index held onto Wednesday's 0.4 per cent drop as the Korean won and Malaysian ringgit jumped, while the kiwi snapped a four-day climb. Yields on 10-year debt from Japan to Australia rose at least one basis point as two-year Treasury yields traded near their highest level since 2011.

Before the Fed, Japanese chief Haruhiko Kuroda is due to speak at a meeting in Tokyo, while Indonesia and Hong Kong review benchmark rates and Indian markets are closed for a holiday. Economists predict Indonesian borrowing costs will be left unchanged.