HONG KONG, RAW – Asian shares have risen, tracking Wall Street higher, though investors are looking to a Federal Reserve policy meeting to see if the central bank will signal any change to the US monetary policy outlook.
Japan’s Nikkei rose 0.89 per cent in early trading on Tuesday and MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.23 per cent.
An early driver was Australian shares, which rose 1.03 per cent, though Chinese blue chips dropped 0.16 per cent and Hong Kong fell 0.21 per cent. All three resumed trading after being shut on Monday for a public holiday.
Overnight, the S&P 500 and Nasdaq closed at record highs, helped by tech names, though the Dow Jones Industrial Average fell 0.25 per cent.
US stock futures, the S&P 500 e-minis, were also up 0.11 per cent.
“We are still getting markets responding positively to the lower volatility in the bond markets and lower yields, and a sense that inflation will be reasonably temporary and the Fed won’t have to slam the breaks on,” said Kyle Rodda, market analyst at brokerage IG.
“I suspect in the next 24-48 hours we’ll see a lot of chop, first on the upside, then a little correction as the market positions itself, and then we’re off to the races if we get the green light from the Fed Thursday morning.”
Traders will look closely at any hints from the meeting’s final statement about whether and when the Fed plans to taper its bond-buying program amid concerns from some quarters about inflation as the US economy bounces back from the pandemic fallout. The two-day meeting starts on Tuesday.
Nearly 60 per cent of economists in a Reuters poll expect a taper announcement will come in the next quarter, despite a patchy recovery in the job market.
Currency markets were quiet before the meeting, with the dollar index, which measures the greenback against a basket of six currencies, broadly flat at 90.502 in early Asia trading.
Benchmark 10-year yields were 1.4872 per cent, little changed from Monday, when they rebounded from Friday’s three-month low.
As for commodities, US crude ticked up 0.55 per cent to $US71.27 a barrel, and Brent crude was at $US73.24 per barrel, having touched on Monday $US73.64 a barrel, its highest since April 2019.
Spot gold was down slightly at $US1862.21 per ounce.
Even bitcoin was fairly quiet, fluctuating a little above $US40 000. It rose on Sunday and Monday after Elon Musk said Tesla could resume accepting payment in the world’s largest cryptocurrency at some point in the future.