Asian Shares, Dollar Wobble As Investors Brace For Fed Outcome
Asian shares and the dollar were on tenterhooks on Tuesday as investors awaited the looming outcome of the Federal Reserve’s rates review, with all eyes on how the Fed steers monetary policy in the wake of Republican Donald Trump’s surprise election win last month.
Crude oil prices also pulled back after their surge to 18-month highs, while a raft of China data had little impact across asset markets, Reuters reports.
Chinese data showed factory output and retail sales grew faster than expected in November, while fixed-asset investment was in-line with forecasts, adding to growing signs of stabilization in the world’s second-biggest economy.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS edged down 0.1 percent, while Japan’s Nikkei stock index .N225 was off early lows but still down 0.2 percent by midday as the dollar came off overnight highs against the yen.
“The market has already priced in a rate hike and some are ready to take profits after confirming the result,” said Masashi Oda, general manager of strategic investment department at Sumitomo Mitsui Trust Asset Management.
The Fed is widely expected to hike interest rates for the first time in 2016 at its two-day meeting, with markets pricing in a nearly 100 percent chance of a quarter percentage point increase to the Fed’s target range of 0.25 to 0.50 percent.
What matters most to investors is the Fed’s statement and economic projections, which will be examined for any signs of reaction to Donald Trump’s surprise victory in the Nov. 8 U.S. presidential election.