Asian equities traded mostly higher on Tuesday after Wall Street took a breather overnight, while investors anticipate the Federal Reserve’s September meeting minutes, looking for hints with regards to another US rate hike this year.
Markets are awaiting Fed’s minutes which will be released on Wednesday, which they hope would shed some light on future US rate increases.
Fed is widely expected to raise its rates in later this year given that the US economy is showing what seems to be a sign of a possible inflation growth, which would urge the central bank to increase its interest rates again.
There is also about a 90 percent chance that Fed will lift its rates again in December.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up by 0.7 percent to $542.78.
Japan’s Nikkei 225 recovered from early losses, gaining 0.6 percent to ¥20,821.50 as it returned from a national holiday on Monday and is moving closer to hit a 21-year high. The highest level it ever recorded since 1996 was at ¥20,952.71 in June 2015.
Analyst Yutaka Miura said that the market expects a December rate hike and the Nikkei have improved as the dollar-yen pair remains strong.
Economist Harumi Taguchi sees dollar strength and the yen falling for the possible rate increase, although the greenback might decline if tensions in North Korea escalate.
North Korea Tensions Boosting Asian Shares
Investors’ ongoing upbeat sentiment despite growing tensions over the Korean Peninsula and uncertain conclusion over Japan’s snap election later this month helped prop up shares in Asia as well.
South Korea’s KOSPI closed 1.6 percent higher to ₩2,433.81on Tuesday, on hopes that the political dispute with its Northern counterpart would ease and as tech shares headed by tech giant Samsung Electronics Co Ltd., climbed as much as 2.9 percent to ₩2,640,000 after a long holiday.
Russia and China has both called for North Korea to exercise control on Monday after US President Donald Trump hinted to use military action against the country.
Trump said that they have been dealing with Pyongyang for 25 years now and so far nothing seems to have convinced the country to stop from taking steps that would only worsen the situation.
In Greater China, shares were also optimistic by the end session, with the Shanghai Composite adding 0.2 percent to CN¥3,382.99, while Hong Kong’s Hang Seng index rose 0.5 percent to HK$28,467.
India’s benchmark BSE Sensex 30 gained 0.2 percent to ₹31,926.24, while Australia’s S&P/ASX 200 declined by 0.02 percent to A$5,738.11. S&P/ASX 200 VIX fell 1.5 percent to A$11.401.
SE Asian Shares Mixed Ahead of Fed Minutes
Shares in Southeast Asian markets were mixed on Tuesday as investors remained cautious over riskier assets ahead of Fed’s meeting minutes on Wednesday.
Singapore’s FTSE STI was down by 0.1 percent to S$3,286.11, while Indonesia’s IDX Composite index shed 0.1 percent to Rp5,905.76.
Malaysia’s KLCI index also slipped by 0.1 percent to RM1,761.13, whereas Thailand’s SET grew 0.7 percent to ฿1,704.32.
Philippines’ PSEi Composite closed with a 0.3 percent gain to ₱8,398.04 as expectations of a tax overhaul continued to support the sentiment. The Senate is set to discuss the tax reform proposal which is intended to urge higher and more secured growth on Wednesday.
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