Asia: Markets struggle for direction ahead of release of Fed minutes

Asian equity markets endured a mixed session on Wednesday, as investors remained edgy ahead of the release of the minutes from the latest US Federal Reserve meeting.

The Fed will publish the meeting of its 27-28 October meeting at 1900 GMT, with investors expecting to find further clues over the timing of a first rate hike.

“At its October meeting the Federal Reserve wrong footed the markets completely by publishing a surprisingly hawkish statement in the face of a much weaker US economic outlook than was the case at the September meeting,” said CMC Markets’ chief market analyst Michael Hewson.

The Shanghai Composite Index fell 1.01%, while Hong Kong’s Hang Seng slid 0.34% as investors highlighted concerns that officials could soon announce plans to relaunch mainland listings, which were halted during the selloff in the summer.

Should mainland listings be reintroduced, that could see investors take cash out from current holdings and, potentially, sparking more losses.

On the macroeconomic front, official figures showed the average price of new homes in 70 Chinese cities advanced for the sixth consecutive month in October, albeit at a slower pace than in the previous month.

Home prices edged 0.07% higher last month compared with a 0.2% gain in September, as lower borrowing costs and looser regulations boosted home buyers in the world’s second largest economy.

Japan’s Nikkei Stock Average gained 0.09% and closed next to its strongest level since late August on the back of a weakening yen, while South Korea’s Kospi was flat and Australia’s S&P/ASX 200 gained 0.29%, after reversing early losses driven by a sharp decline in commodity prices.

However, throughout the session, investors moved money from the struggling resources sector into banks, telecoms and utilities, with Dexus Property Group, Telstra and Bank of Queensland climbing 1.7%, 0.95% and 2.63% respectively.

Elsewhere, on the currencies front, the yen touched its lowest level in eight days against the dollar, while the Australian dollar slid 0.09% against its US counterpart.

“Dollar sensitivity remains rife to interest rate expectations and with the rising optimism around the Fed acting in the near future, the Dollar bulls have been empowered once more,” said FXTM research analyst Lukman Otunuga.

“If hawks show face in this evening’s FOMC meeting minutes, the USD may appreciate as expectations inflate further of a US interest rate increase in December.”