Published: Wed, March 20, 2019
Money | By Ralph Mccoy

Asian shares mixed in muted trading ahead of US Fed meeting

Asian shares mixed in muted trading ahead of US Fed meeting

Bets that the Federal Reserve will this week reinforce the market view that the USA tightening cycle is in the rear-view mirror have kept alive the bid on stocks, while the dollar index touched its lowest since March 1.

MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.4 per cent, led by losses in Australia and South Korea.

Shares were higher in Taiwan and Thailand but fell in Singapore and Indonesia.

All three major Wall Street indices rose overnight, lifted by the bank and technology sectors, with the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite adding between 0.3 and 0.4 per cent each.

Some market players said selling was triggered by a report of United States concerns that China is pushing back against American demands in trade talks.

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin plan to travel to China next week for another round of trade talks with Chinese Vice Premier Liu He, a Trump administration official said on Tuesday.

"China is eager to come to an agreement so I'm not too anxious", said Wang Shenshen, strategist at Tokai Tokyo Research Center. "As long as they are holding meetings, many things will work out", said Wang Shenshen, strategist at Tokai Tokyo Research Centre.

The German economy, Europe's largest, barely avoided recession in the final quarter of a year ago, as the negative impact from global trade disputes and Brexit weighed on a decade of expansion.

Bets on an interest rate cut have increased after weaker-than-expected manufacturing data on Friday.

The Fed is widely expected keep rates steady later in the day, putting the main market focus on its policymakers' rate projections for the next few years.

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The U.S. central bank is expected to hold rates steady and cut the number of hikes projected for the rest of the year, signaling since early this year a "patient" approach to increasing borrowing costs.

More detail on a plan to stop cutting the Fed's holdings of almost $3.8 trillion in bonds is also expected, analysts said. The Fed is unlikely to kill such hopes.

With global economic growth appearing to slow, traders were focused on the Fed, which kicks off a two-day policy meeting later in the day, for clues about the likely path of USA borrowing costs.

The dollar index against a basket of six major currencies eased 0.1 per cent to 96.450, hovering close to a two-week low. The euro slipped to $1.1343 from $1.1351 on Tuesday.

The Japanese yen strengthened 0.03 percent versus the greenback at 111.40 per dollar.

Sterling was 0.3 percent lower at $1.3220. It had seesawed overnight after the speaker of Britain's parliament said Prime Minister Theresa May's Brexit deal could not be voted on again unless a different proposal was submitted.

The latest Brexit bombshell occurred Monday when the speaker of the House of Commons ruled that May can not keep asking lawmakers to vote on the same divorce deal that they have already rejected twice.

On the other hand, the EU's chief negotiator, Michel Barnier, has said an extension would only make sense if it increased the chances of May's deal being ratified by Britain's House of Commons.

Among commodities, oil prices were little changed after hitting 2019 highs, maintaining recent strength on the back of expectations for OPEC to continue production cuts.

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