Asia report: Investors keep wallets closed ahead of Fed, BoJ

Markets in Asia finished mixed on Tuesday as investors kept their wallets closed ahead of major central bank decisions due this week.

In Japan, the Nikkei 225 was off 0.49% and closed at 17,353.28.

The yen broke the 111 mark against the greenback in late afternoon trading, It was last 0.35% stronger at JPY 110.81 per dollar.

Most major exporters in the country closed lower, with Toyota down 0.72%, Nissan off 0.99% and Honda losing 0.69%. Sony closed up 0.51%, while the embattled Mitsubishi Motors slid down 9.58%.

Markets on the mainland finished higher, with the Shanghai Composite Index gaining 0.64% to 2,965.39, while the Shenzhen Composite added 1.18% to 1,881.98.

Chinese metal equities were mixed, with Baoshan Steel down 0.17%, Nanjing Steel off 0.37% and Yunnan Copper suffering a 0.88% blow.

Korea’s Kospi hovered just above and below the line during the session, before closing up 0.25% at 2,019.63. In Hong Kong, the Hang Seng Index was up 0.48% at 21,407.27.

Malaysia’s markets lagged after reports the scandal-ridden state investor 1Malaysia Development Berhad missed payment on some of its bonds. The fund reportedly did not make a $50.3m payment on its bonds due 2022, following a dispute with Abu Dhabi’s sovereign fund, IPIC. 1Malaysia told media it would meet all other liabilities.

The FTSE Bursa Malaysia index in Kuala Lumpur finished the day down 1.15% at 1,694.79. Malaysia’s ringgit was last 0.63% weaker against the greenback, at MYR 3.9320 per USD.

In the US, the Federal Open Market Committee was due to start its two-day policy meeting later on Tuesday local time. The Bank of Japan and the Reserve Bank of New Zealand are also set to make important decisions this week.

Most analysts are looking for the Fed to keep rates steady, while the BoJ looks likely to ease monetary policy further.

"The Fed is unlikely to signal June as a potential rate hike meeting, but September is likely to see its market pricing firm alongside inflation expectations," said Angus Nicholson, a market analyst at IG.

Oil prices retraced morning gains to finish Asian trading lower, though they started to recover as the region went to bed. Brent crude was last up 0.62% at $44.76 per barrel, while West Texas Intermediate was up 0.65% at $42.92.

Market intelligence firm Genscape reported on Tuesday that US crude stockpiles at Cushing, Oklahoma were up by more than 1.5 million barrels in the week to 22 April.

There were also reports that Saudi Arabia was pressing ahead with expanding its Shaybah oilfield by the end of next month, in a bid to increase output capacity from 750,000 barrels per day to one million.

“Given the news flow, the surprise perhaps is that the falls haven’t been bigger,” said National Australia Bank co-head of foreign exchange strategy Ray Attrill.

Down under, Australia’s S&P/ASX 200 returned from a holiday weekend to fall 0.3% to 5,220.60, led by declines in energy and materials. Santos closed down 3.68% while Woodside Petroleum was off 1.44%.

In resources, Rio Tinto was down 3.06%, Fortescue off by 6.25% and BHP Billiton down 2.95%.

New Zealand shares also fell on their return from ANZAC Day, with the S&P/NZX 50 down 1% at 6,795.71. Local analysts saw few foreign buyers during the day, backing up the suggestion that foreign buyers were sitting on their cash for now.

The down under dollars were edging ever closer to the USD, with the Aussie 0.32% closer at AUD 1.2920 and the Kwii ahead 0.53% at NZD 1,4509.