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Asian investors tread carefully ahead of US Fed decision

Asian investors tread carefully ahead of US Fed decision

HONG KONG, Sept 20: Asian markets moved tentatively Wednesday ahead of a Federal Reserve policy decision, while geopolitical issues returned after Donald Trump threatened to “totally destroy” North Korea if it did not rein in its nuclear ambitions, reports AFP. A third successive record on Wall Street, fanned by speculation about Trump’s economic agenda, was not enough to entice buying in the region as equity dealers cash in recent gains. Foreign exchanges were also seeing little movement before the US central bank’s meeting concludes, with the dollar essentially flat, although the Mexican peso was down 0.3 percent after a deadly earthquake killed scores in Mexico. Stephen Innes, head of Asia-Pacific trading at OANDA, said: “Markets have reached a crossroad and dealers are sitting tight ahead of (the Federal Open Market Committee meeting). It seems like a typical pre FOMC week with low currency volatility.” While policymakers are not expected to raise interest rates, the post-meeting statement and comments from Chair Janet Yellen are the main focus as traders hope for a timetable on winding down its crisis-era bond-buying stimulus. “The market doesn’t expect anything earth-shattering from the meeting but there are risks on both sides,” Greg McKenna, chief market strategist at AxiTrader, said in a commentary. Tokyo shares ended little changed Wednesday after hitting a more than two-year high, but Nintendo surged on hopes for strong sales of its Switch games console. The Super Mario maker jumped 4.73 percent to 42,890 yen, adding to a more than seven percent gain Tuesday, after Credit Suisse boosted its outlook on the gaming device and as the industry gears up for this week’s Tokyo Game Show. “Nintendo surged... on hopes that the company will unveil new game titles for Switch” at the show, Okasan Online Securities said in a commentary. Investors were also keeping an eye on US and Japanese central bank meetings, after Tuesday’s rally saw the benchmark index jump nearly two percent to close at its highest level in more than two years. “The market paused after feeling a sense of accomplishment yesterday,” said Toshikazu Horiuchi, a broker at IwaiCosmo Securities. Tokyo’s Nikkei 225 ended Wednesday up 0.05 percent, or 11.08 points, at 20,310.46, while the broader Topix index was flat, inching up 0.04 points to 1,667.92. “Overall, investors took a wait-and-see stance with a FOMC (Federal Open Market Committee) decision on the way,” Okasan said, referring to the US central bank’s policy-setting group. Geopolitical factors were also in focus after President Donald Trump escalated his rhetoric on North Korea, threatening to “totally destroy” the country if it does not back down on its nuclear ambitions. Among major Tokyo-listed shares, Panasonic added 0.81 percent to end the day at 1,665 yen and Toyota slipped 0.39 percent to 6,703 yen. Nissan edged up 0.04 percent to 1,153.5 yen but Sony dropped 1.19 percent to 4,243 yen. In forex markets, the dollar traded at 111.45 yen, weakening from 111.60 yen in New York. Sydney and Singapore each shed 0.1 percent, while and Seoul was 0.2 percent down. However, Hong Kong edged up 0.2 percent in the afternoon and Shanghai closed 0.3 percent higher. In early European trade London rose 0.1 percent while Paris and Frankfurt were flat. The US-North Korea stand-off was thrown back into focus by Trump on Tuesday when he warned Pyongyang over its nuclear programme in his maiden UN General Assembly speech. The president said he would wipe out the North if it threatened the US or its allies and warned Kim Jong-Un was “on a suicide mission for himself and for his regime”. “The United States is ready, willing and able, but hopefully this will not be necessary,” he said. McKenna said “we all need to keep a weather eye on North Korea”, although he added that the tycoon was “much more conciliatory” to the United Nations than he had been in the past. U.S. stock index futures were little changed on Wednesday as investors awaited clues from the Federal Reserve meeting on whether the central bank will raise interest rates for a third time this year. The policy statement and projections are due to be released at 2 p.m. ET (1800 GMT). Fed Chair Janet Yellen will hold a press conference half an hour later. The Fed is likely to say that it will start unwinding its holdings of about $4.2 trillion in bonds and mortgage-backed securities from October. While a September interest rate increase is not expected, investors will closely study Yellen’s views on inflation. Though inflation remains stubbornly below the Fed’s 2- percent target rate, a recent data showed uptick in domestic consumer prices, which raised the chances of a December rate hike by more than 50 percent. Traders now bet the odds of a December move at 56.4 percent, compared with 46.8 percent a week ago, according to the CME Group’s FedWatch tool. The three major U.S. stock indexes closed at record highs on Tuesday, with the financial stocks providing the biggest boost. Economic data includes a report on existing home sales that is likely to show it increased 0.3 percent in August, after falling to its lowest level in 11 months in July that signaled a slow recovery in the housing market. Oil prices were set for their largest third-quarter gain in 13 years, after the Iraqi oil minister said OPEC and its partners were considering extending or deepening supply cuts. Adobe fell 2.30 percent in premarket trading after the Photoshop maker’s revenue forecast came in line with estimates. Fedex was down 1.39 percent after the package delivery company’s quarterly profit took a hit from a cyberattack and it cut its full-year earnings forecast. Pfizer was up more than 1 percent after Morgan Stanley upgraded stock to “overweight”. Western Digital slipped 3.36 percent after Reuters reported Japan’s embattled Toshiba has chosen a group led by private equity firm Bain Capital to buy its prized memory chip unit. Bed Bath & Beyond (BBBY.O) sank more than 13 percent after the home furnishing retailer reported earnings and sales below estimates, prompting a slew of price target cuts.

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