Asia report: Markets mixed as participants look to Fed meeting

Markets in Asia had given back some of their gains by the end of the day on Monday, as investors closed their pocket books ahead of the US Federal Reserve meeting later in the week.

In Japan, the Nikkei 225 was up 0.17% at 29,766.97, as the yen weakened 0.05% against the dollar to last trade at JPY 109.08.

Automation specialist Fanuc was down 0.4% and technology conglomerate SoftBank Group lost 2.49%, while fashion firm Fast Retailing gained 0.73%.

Technology and e-commerce giant Rakuten rocketed 24.1% on Monday, after it announced late on Friday that it was raiding $2.2bn in new capital through the issue of new shares.

The broader Topix index was ahead 0.91% by the end of trading in Tokyo, settling at 1,968.73.

On the mainland, the Shanghai Composite was down 0.96% at 3,419.95, and the smaller, technology-heavy Shenzhen Composite slid 2.13% at 2,172.94.

Fresh unemployment data from China’s National Bureau of Statistics showed the jobless rate for those aged 16 to 24 was 13.1% in February, as the country’s youngest workers struggled to gain work a year after the Covid-19 pandemic swept the People’s Republic.

The national urban unemployment rate for the month was comparatively mild, standing at 5.5%.

South Korea’s Kospi was off 0.28% at 3,045.71, while the Hang Seng Index in Hong Kong managed gains of 0.33% to 28,833.76.

The blue-chip technology stocks were firmer in Seoul, with Samsung Electronics down 1.21% and SK Hynix falling 2.5%.

Investors were looking ahead to the Federal Open Market Committee’s March meeting, due to take place on 16 and 17 March, where many are expecting members to revise the US GDP forecast upwards.

That would come as a result of the passing of president Joe Biden’s $1.9trn stimulus package, which will see $1,400 cheques distributed to most Americans shortly.

“The shape of the yield curve has changed appreciably this year, with the increase in long-term interest rates over the past several months and a drop in short-term interest rates in recent weeks pushing the spread between 10-year yields and overnight interest rates to its widest reading since 2017,” said Daiwa Capital Markets America chief economist Michael Moran.

“The shift has led many market participants to expect the Federal Open Market Committee to take some action to narrow this spread.

“The most common views are for the Fed to lift the rates on excess reserves and reverse repurchase agreements to nudge short-term rates higher, and to shift purchases in its quantitative easing programme toward the long end of the maturity spectrum to dampen the increase in long-term rates.”

Moran said one or both of these changes was possible, but he was looking for officials to hold the excess reserves and reverse repurchasing rates steady, and maintain the quantitative easing programme in its current form.

Oil prices were higher at the end of the Asian day, with Brent crude last up 0.2% at $69.36 per barrel, and West Texas Intermediate rising 0.21% at $65.75.

In Australia, the S&P/ASX 200 eked out gains of 0.09% to 6,773.00, as the hefty financial subindex rose 0.26% and the energy sector was ahead 0.79%.

That was offset by losses in materials plays, with that industry losing 0.61% by the close in Sydney.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was ahead 1.33% at 12,592.26, led higher by Tourism Holdings and cinema software firm Vista Group, which added 4.4% and 4.3%, respectively.

Both companies had been buoyant in recent sessions on hopes for both the travel and leisure sectors, as the rollout of coronavirus vaccines continued globally.

The down under dollars were in a mixed state against the greenback, with the Aussie last 0.12% weaker at AUD 1.2908, while the Kiwi strengthened 0.31% to NZD 1.3899.