SYDNEY- Asian markets were trading mostly weaker on Wednesday ahead of the US Federal Reserve’s expected interest rate rise to be delivered later in the day, as investors also weighed the likelihood of a Chinese economic stimulus package.
MSCI’s broadest index of Asia-Pacific shares outside Japan was flat, after US stocks ended the previous session with mild gains. The index is up 3.8 percent so far this month.
The yield on benchmark 10-year Treasury notes rose to 3.8924 percent , compared with its US close of 3.912 percent on Tuesday.
The two-year yield which rises with traders’ expectations of higher Fed fund rates, touched 4.8848 percent compared with a US close of 4.893 percent .
Australia was the only major market across the Asia Pacific region to see shares rise, with the S&P/ASX 200 index up 0.81 percent . Japan’s Nikkei stock index was off 0.12 percent .
In Hong Kong, the Hang Seng index was down 0.54 percent and China’s blue chip CSI300 index was off 0.13 percent in early trade.
Positive sentiment returned to China’s market on Tuesday, when the CSI 300 Index snapped a six-day losing streak by closing up nearly 3 percent to record the best day since last November.
On Wall Street, the three main indices closed higher, led by gains in shares of technology, materials and communication services companies.
The Dow Jones Industrial Average rose 0.08 percent to 35,438.07, the S&P 500 gained 0.28 percent to 4,567.46 and the Nasdaq Composite added 0.61 percent to 14,144.56.
The Fed’s July decision will be announced later on Wednesday following its two day meeting. The benchmark rate is expected to be lifted to a range between 5.25 percent and 5.5 percent .
“Global equity markets traded positively ahead of the (Fed) announcement where it is widely expected to hike 25 basis points,” ANZ economists wrote in a note Wednesday.
“A follow-up hike is partially priced in over the second half, but we think this will be the last hike this cycle,” the economists said, adding ANZ did not expect a US rate cut until the second quarter of 2024.
The prospect of a China stimulus package is still being mulled by investors after the country’s top leaders this week flagged policy support for the COVID-ravaged economy.
