SYDNEY- Asian shares were subdued on Wednesday with investors wary of any hint of hawkishness from the US Federal Reserve given lofty asset valuations rely so heavily on an endless supply of super-cheap money.
A looming data dump on Chinese retail sales and industrial production offered another reason for caution, with some modest slowdown in annual growth expected.
Moves were modest, except in the oil market where prices hit the highest since April 2019 on a potent mix of post-pandemic demand and restricted production.
MSCI’s broadest index of Asia-Pacific shares outside Japan barely moved, while Chinese blue chips dipped 0.3 percent.
Japan’s Nikkei eased 0.2 percent, but South Korean stocks rose 0.6 percent to a record high after five months of effort.
Both S&P 500 futures and Nasdaq futures were all but unchanged. EUROSTOXX 50 futures rose 0.1 percent and FTSE futures 0.3 percent.
For dealers, discretion was the better part of valor ahead of the conclusion of the Fed’s two-day meeting later in the session.
Trading could be choppy around the event as forecasts from Fed members might read as hawkish, while the news conference from Fed Chair Jerome Powell has tended to sound dovish.
“We think Chair Powell will indicate officials discussed talking about tapering, but tapering itself is still someway off given the Fed remains well short on making substantial progress on employment with payrolls still 7.3 million below pre-pandemic levels,” said NAB economics director Tapas Strickland.
Key will be Fed members’ projections, or dot plots, for interest rates and whether more now tip a hike in 2023. Previously only 7 out of 18 had seen such a move. – Reuters
