MSCI’s broadest index of Asia-Pacific shares outside Japan however failed to extend the rally and dropped 0.2 per cent, though moves were subdued ahead of the Fed decision
Asian shares were mixed on Wednesday, while oil prices slipped to six-month lows as traders waited for the year’s final policy decision from the Fed and hints on whether the central bank will cut rates next year.
Brent bottomed at $72.75 a barrel, its lowest level since late June, while U.S. crude slipped to $68.14 a barrel on concerns of softening demand and oversupply.
The Federal Reserve takes centre stage on Wednesday, where it is due to announce its rate decision at the conclusion of its two-day policy meeting.
Market expectations are for policymakers to keep rates on hold , unmoved by U.S. inflation data that came in largely in line with consensus.
That leaves focus on Powell’s press conference and the Fed’s dot plot of future policy trajectory.
The December FOMC (Federal Open Market Committee) is poised to be short on action, given the consensus for no rate hike, but may nevertheless be big on drama, said Vishnu Varathan, head of economics and strategy at Mizuho Bank.
In particular, as a refreshed dot plot accompanied by revisions to the summary of economic projections that offer ample fodder to interpret the propensity for a Fed pivot as well as confidence around a soft landing, he added.
But the growing danger is that the Federal Reserve’s inclination may be to calibrate expectations for a pivot, Varathan said.
Nevertheless, investors continue to bet that the Fed is all but certain to begin easing monetary policy in 2024, and are pricing in a 75 per cent possibility the first cut could come as early as May, as per the CME FedWatch tool.
Those expectations kept market sentiment buoyant, lifting U.S. stocks to new 2023 highs on Tuesday.
MSCI’s broadest index of Asia-Pacific shares outside Japan however failed to extend the rally and dropped 0.2 per cent, though moves were subdued ahead of the Fed decision.
Japan’s Nikkei rebounded 0.6 per cent.
In China, blue-chip stocks dropped around 0.5 per cent while Hong Kong’s Hang Seng index shed 0.8 per cent, as investors continue to look for clues for further policy support from Beijing.
