Asia report: Stocks mixed ahead of US Fed decision

Markets closed in a mixed state in Asia on Wednesday, as investors closed their pocketbooks ahead of the conclusion of the US Federal Reserve’s meeting later in the global day.

In Japan, the Nikkei 225 was down 0.44% at 27,011.33, as the yen weakened 0.24% against the dollar to last trade at JPY 114.15.

Technology conglomerate SoftBank Group was up 1.72%, while among the benchmark’s other major components, automation specialist Fanuc was down 3.29% and fashion firm Fast Retailing was 0.56% weaker.

The broader Topix index was off 0.25% by the end of trading in Tokyo, closing at 1,891.85.

On the mainland, the Shanghai Composite was up 0.66% at 3,455.67, and the smaller, technology-heavy Shenzhen Composite was 0.7% firmer at 2,329.17.

South Korea’s Kospi lost 0.41% to 2,709.24, while the Hang Seng Index in Hong Kong managed gains of 0.19% to 24,289.90.

Tech stocks staged a partial recovery from Tuesday’s losses in the special administrative region, with the Hang Seng Technology Index closing 0.8% higher.

Among its constituents, JD.com was up 1.5% and Tencent Holdings was 1.46% firmer.

Floundering property development giant China Evergrande was also in focus, with its shares rising 1.72% in Hong Kong after a Reuters report suggested the firm was holding a call with investors and financial advisors on Wednesday night local time.

It would be the company’s first call since it defaulted on a number of overseas bond payments in December.

Seoul’s blue-chip technology stocks were on the back foot, with Samsung Electronics down 0.95% and SK Hynix losing 0.42%.

Putting a damper on sentiment early in the Asian day was a downgrading of global growth forecasts from the International Monetary Fund.

The IMF said it now expected global gross domestic product (GDP) to expand 4.4% in 2022, down from 5.9% in 2021 and half a percentage point lower than its previous projection.

It cited growing Covid-19 cases fuelled by the fast-spreading Omicron variant, as well as soaring inflation and supply chain issues as behind the downgrade.

Investors ended the day looking across the Pacific to the US Fed, which was due to wrap up its latest policy meeting later on Wednesday.

Market participants were expecting the central bank to tighten its rhetoric to signal a rise in interest rates as soon as in March, as well as other policy tightening, in a bid to stem the rapid rise in consumer prices.

“The major area of focus today will be the outcome of the FOMC’s latest monetary policy meeting,” said analysts at Rabobank.

“In terms of the market’s expectations for this meeting - based on the Bloomberg survey of economists - the FOMC is expected to make tweaks to its published statement in order to indicate that a rate hike is imminent.

“43% of survey respondents think that new guidance will suggest an interest rate hike at the March 2022 meeting will be appropriate, while 43% think that new guidance will suggest a hike may be appropriate ‘soon’.”

Oil prices were higher at the end of the Asian day, with Brent crude last up 0.86% at $88.96 per barrel, and West Texas Intermediate rising 0.64% to $86.15.

In Australia, traders enjoyed a day off for the Australia Day national holiday, while across the Tasman Sea, New Zealand’s S&P/NZX 50 advanced 0.47% to 12,185.65.

Wellington’s bourse was led higher by recoveries from some of its more volatile stocks, which had suffered from the global sell-off in recent days.

Outdoor equipment and clothing brand Kathmandu was up 2.3%, subscription broadcaster Sky Network Television was 2.6% firmer, and cinema technology company Vista Group added 3.5%.

The down under dollars were both stronger on the greenback, with the Aussie last ahead 0.29% at AUD 1.3940, and the Kiwi advancing 0.14% to NZD 1.4936.