Asian markets make shaky gains ahead of Fed decision, oil slips
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After a shaky start, MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.5 per cent, snapping a four-day losing streak.
PHOTO: EPA
- Asian markets rose modestly, led by Korean and Taiwanese shares, as bond selloff eased and oil prices fell before the US Federal Reserve's key interest rate decision.
- The US 10-year Treasury yield held near 5%, with a 93% market chance of a 25 basis-point Fed rate hike, seen as crucial to resetting rate expectations.
- US stocks fell amid rising yields and oil prices, while digital assets steadied after the US Senate rejected major cryptocurrency legislation.
AI generated
SINGAPORE – Stocks edged higher in Asia on Sept 16 as a respite in the global bond selloff and a drop in oil prices steadied nerves ahead of a pivotal US Federal Reserve decision later in the day.
After a shaky start, MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.5 per cent, snapping a four-day losing streak, with gains for Korean and Taiwanese shares leading the way.
The Nikkei 225 rose 0.3 per cent, while S&P 500 e-mini futures were 0.2 per cent higher.
The yield on the US 10-year Treasury bond was flat at 4.99 per cent after attempting to retest the 5 per cent mark, having broken through that threshold on Sept 15 for the first time in three years.
The Federal Reserve will announce its latest policy decision later in the day, followed by a media conference by Fed chair Kevin Warsh.
“We maintain our tactically cautious/neutral view into the Fed,” JPMorgan analysts wrote, noting that the market consensus expectation is for a 25 basis-point rate hike accompanied by little forward guidance.
The meeting “could be a clearing event” for the market “to reset rate hike expectations”, they added, but warned “inaction risks institutional credibility”.
If no hike materialises and bond yields extend their rally on higher inflation expectations, the bank anticipates the S&P 500 could move 1.25 per cent to 1.75 per cent lower.
US President Donald Trump has repeatedly stated a preference for lower interest rates, saying in August the US will stop trading with countries with which it has a trade deficit if the Fed does not cut rates.
Traders have looked through these threats and believe that a hike from the Federal Reserve is almost assured, pricing an implied 93 per cent probability of a 25-basis-point hike when it announces its policy decision, according to the CME Group’s FedWatch tool, compared to a 61.2 per cent chance a week ago.
Overnight on Wall Street, the S&P 500 slumped 0.5 per cent, marking its second consecutive day of declines as the yield on the 10-year Treasury bond hit its highest since 2007.
“US equity markets closed lower overnight as rising Treasury yields, another jump in crude and the polarised debate around pacing AI development left the market in a cautious mood,” said Tony Sycamore, market analyst at IG in Sydney.
The US dollar index, which measures the greenback’s strength against a basket of six currencies, edged down 0.1 per cent to 99.601 after nearing a two-week high.
Oil prices slipped in Asian trade, with Brent crude futures down 0.6 per cent at US$108.13 a barrel.
This comes after they rose 2.9 per cent on Sept 15 as shipping industry sources said crude loadings at Saudi Arabia’s Red Sea export hub of Yanbu had been suspended and Riyadh cancelled some cargo deliveries to European customers.
Digital assets steadied from a rout after the US Senate on Sept 15 voted against advancing comprehensive cryptocurrency legislation backed by Trump.
Bitcoin was off 0.1 per cent at US$75,821.94, while ether slipped 0.2 per cent to US$2,402.12. REUTERS