June 19, 2018, 7:47 pm
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Asian stocks step back

TOKYO- Asian shares slipped back on Wednesday as investors looked to the Federal Reserve policy decision later in the day and any clues it might give on future rate hikes, shifting focus away from the historic US-North Korea summit in Singapore.

MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.5 percent, erasing the slim gains they made following Tuesday’s meeting between US President Donald Trump and North Korean leader Kim Jong Un.

Trade frictions between the United States and China are also back on radar ahead of Friday, by when Washington has said it will release a list of some $50 billion worth of Chinese goods that will be subject to a 25 percent tariff.

“For Asian markets, tariffs will be the biggest concerns in the near term,” said Yukino Yamada, senior strategist at Daiwa Securities.

Japan’s Nikkei eked out gains of 0.25 percent, following the 0.17 percent gains in the US S&P 500 the previous day.

On Wall Street, technology shares continued to lead the rally, with the Nasdaq Composite adding 0.57 percent to finish at record high of 7,703.

With the US-North Korea summit out of the way, market focus is quickly shifting to the Fed’s two-day policy meeting ending on Wednesday.

The Fed is widely expected to raise interest rates for the second time this year after a move in March, but the bigger question for investors is the outlook for future monetary tightening amid an ongoing economic expansion. 

“With a rate hike almost fully priced in, the focus is on how many times the Fed will raise rates this year and next and how much beyond the levels it considers as neutral to the economy, or what they call the longer-run rates,” said Shuji Shirota, head of macro economic strategy group at HSBC Securities in Tokyo.

Projections from the Fed’s March meeting suggest a benchmark rate of 2.1 percent at end of 2018, based on the median forecast of central bank policymakers, which would mean three rate hikes in total this year. – Reuters 
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